Supreme Court Quashes Electricity Tribunal Review On Damodar Valley Corporation Tariff, Upholds Sinking Fund And Depreciation Benefits, Imposes Exemplary Costs For Violating Binding Precedent
Supreme Court Restores Damodar Valley Corporation Tariff Order, Rules Electricity Tribunal Cannot Revisit Settled Sinking Fund Treatment Through Belated Review Contrary To Binding Article 141
Facts
Damodar Valley Corporation (DVC), a statutory electricity and regional-development undertaking, challenged a 2024 review decision of the Appellate Tribunal for Electricity (APTEL) concerning its 2009–2014 tariff. CERC had permitted recovery of sinking-fund contributions, used to redeem DVC bonds, alongside depreciation. APTEL affirmed the treatment on 17 May 2019, relying on the Supreme Court’s earlier binding ruling in Bhaskar Shrachi Alloys. After a review remained pending for more than five years, APTEL reversed course, reasoning that inclusion of both items conferred a double benefit and that DVC must choose one. Maithan Alloys defended the review; Steel Authority of India Ltd. (SAIL) intervened in support of it.
Issues
Whether Section 40 of the DVC Act and Regulation 43 of the CERC Tariff Regulations, 2009 permit both sinking-fund contribution and depreciation in tariff computation; whether the Tribunal could reopen a point resolved by a binding Supreme Court precedent through review; and whether its five-year-delayed decision exceeded the narrow jurisdiction to correct an apparent error.
Petitioner’s Arguments
DVC submitted that the Tribunal had disregarded Bhaskar Shrachi Alloys Ltd. v. DVC, (2018) 8 SCC 281, which upheld the statutory treatment of depreciation and sinking funds. It relied on the fourth proviso to Section 14 of the Electricity Act, 2003, preserving compatible provisions of the DVC Act, and on Sections 37 and 40 of that Act. Regulation 43(2)(iii)–(iv) expressly recognises DVC depreciation and Section 40 funds as tariff items. A supposed accounting duplication, already considered by the original Tribunal, could not justify review or avoidance of Article 141.
Respondent’s Arguments
Maithan Alloys and supporting intervener SAIL argued that DVC obtained double recovery: depreciation on capital assets financed by bonds and a further allowance for sinking-fund contributions towards redemption of those bonds. They contended that a reserve funded from profits was not an operating expenditure and that APTEL could correct its earlier failure to prevent duplication. They urged restriction of the tariff to one allowance, so consumers would not bear an unjustified burden.
Analysis of the Law
The fourth proviso to Section 14 of the Electricity Act treats DVC as a deemed licensee and preserves the DVC Act where consistent with the 2003 Act; Sections 61, 62, 64 and 79 still govern regulated tariffs. Section 40 of the DVC Act requires provisions for depreciation, reserves and other funds before determining net profits. Regulation 43(2)(iii) adopts CAG-set depreciation rates and clause (iv) allows Section 40 funds to be recovered through tariff. Article 141 makes Supreme Court law binding. Review under Section 122(f) of the Electricity Act is not an appeal and requires a genuinely self-evident error, not a competing legal interpretation.
Precedent Analysis
Bhaskar Shrachi Alloys Ltd. v. Damodar Valley Corporation, (2018) 8 SCC 281, had directly approved the treatment of depreciation and sinking-fund contribution under Section 40; the Court found no reason to refer that decision to a larger Bench. State of West Bengal v. Kamal Sengupta, (2008) 8 SCC 612, explains that review is confined to an error apparent from the record, not one discoverable only through extended argument, and that a tribunal cannot sit in appeal over its earlier decision. Its review principles were applied to Section 122(f) of the Electricity Act.
Court’s Reasoning
Justice K. Vinod Chandran held that DVC’s special statutory financing regime departs from ordinary accounting rules: Section 40 and Regulation 43 expressly permit recovery of sinking-fund contributions as expenditure while allowing depreciation. The original APTEL decision had addressed the alleged double allowance, and the Supreme Court precedent had settled the question. The review Tribunal’s assertion that the issue escaped previous consideration was therefore unsustainable. Revisiting a binding holding under the guise of finding an apparent error transgressed review jurisdiction and violated judicial discipline under Article 141. The prolonged review and SAIL’s intervention drew particularly strong criticism.
Conclusion
The Supreme Court allowed DVC’s appeal, set aside the challenged review decision and restored APTEL’s original order of 17 May 2019. It imposed ₹2,00,000 costs on Maithan Alloys and ₹1,50,000 on SAIL, payable to DVC within one month, failing which 18% annual interest applies, besides allowing the appeal with costs. The ruling safeguards finality of tariff adjudication and confirms that statutory review cannot override a binding Supreme Court determination.
Case: Damodar Valley Corporation v. Maithan Alloys Limited & Ors.
Court: Supreme Court of India
Case Number: Civil Appeal No. 11106 of 2024; 2026 INSC 1178
Judge: Justices J.B. Pardiwala and K. Vinod Chandran (author)
Date: 30 October 2026
Result: Appeal allowed; 2024 review set aside; APTEL order dated 17.05.2019 restored; ₹2 lakh costs against Maithan Alloys and ₹1.5 lakh against SAIL.
