Avenue for Appeal

Proposed tribunal promises effective disposal of cases

An appellate tribunal for the power sector is expected to be set up shortly, as proposed by the Electricity Act, 2003. The government is currently in the process of appointing its members. The tribunal will address appeals against orders of the central and state regulatory commissions and exercise general supervision over the commissions. Powerline invited the views of the sector experts on whether such an authority would be able to bring more transparency and order into the sector...

In what ways can an appellate tribunal improve the working of the power sector? Are there any particular instances/disputes that, in your opinion, can be addressed only by such a tribunal?

P.N. Bhandari
Chapter XI of the Electricity Act, 2003 deals with the constitution and working of the appellate tribunal. This chapter has been very thoughtfully crafted. We are governed by the rule of law. Right of appeal is one of the basic features of rule of law. Some sort of appeal or review has to be there. This cannot be said to affect the autonomy of the commissions. If the initial order of the central or state electricity regulatory commissions (SERCs) suffers from certain lapses, it has to be appropriately reviewed by the next higher authority. If the decisions of high courts can be challenged before the Supreme Court, there should be no objection if decisions of a commission are also subject to appeal. No organization can be made autocratic and given unbridled powers in the name of autonomy.

Moreover, in the absence of the appellate tribunal too, the orders of the regulatory commissions have not been final. They have been challenged in the high courts under writ jurisdiction. The high courts are flooded with cases and delays have been inevitable. The other advantage of the tribunal is of expertise. The regulatory commission or the appellate tribunal would be expert bodies, dealing exclusively with power sector cases. Such expertise would be rare in the high courts. From this angel, if there is a choice between approaching the high court or the tribunal, one would prefer the latter, which would be an expert body. The higher judiciary has also recognized the importance of expert bodies and has always exercised restraint in interfering with their findings. Under Section 120 of the act, the tribunal will not be governed by procedure laid down by the Civil Procedure Code. It can regulate its own procedure. This section provides adequate flexibility and will ensure that the tribunal does not get bogged down in procedural wrangles.

While the writ jurisdiction of the Supreme Court or the high courts cannot be totally ousted, by providing an appellate tribunal, the intervention of the courts will be substantially reduced. The appellate jurisdiction of the courts and tribunals is much wider as questions of facts can also be raised in appeal. But under writ jurisdiction, only questions of law can be raised. Since most of the decisions of the regulatory commissions are based on facts, the courts would discourage writs against the orders of the commissions on the ground that the petitioners should first raise the matter before the appellate tribunal. This is a big tactical gain, since otherwise the concerned parties would rush to the courts on very flimsy grounds and delay matters indefinitely. Once scope for appeal has been provided under the act, the higher judiciary generally discourages writs, unless substantial questions of law are involved. The same tactical advantage would be available in the provision of appeal before the Supreme Court. Since appeal lies to the Supreme Court, the writ jurisdiction of the high courts cannot be invoked easily. Earlier, the legal position was that even the orders of the Central Electricity Regulatory Commission (CERC) were frequently challenged in the high courts. Different high courts would sometimes have different interpretations. This led to delay and uncertainty, till the Supreme Court finally settled the issue. Now there will be uniformity, as a single appellate tribunal would be dealing with appeals against all the ERCs.

The appellate tribunal is better equipped to discharge its functions. First, it is an expert body. While the chairman will have a judicial background, the other members would have been secretaries to the government, dealing with economic affairs or infrastructure. In all probability, one of the members would have a background in the power sector. Such a member with a technical background would help the tribunal in gaining a deeper understanding of sector issues. The composition of the tribunal ensures a more professional and balanced approach, while the courts’ would have a legal background only.

C.P. Jain
After enactment of the Electricity Regulatory Commissions Act, 1998 ERCs were constituted in different states and at the centre. As per this act, the redressal mechanism against the orders of the ERCs was through appeals in the high court. Cases were filed in most of the high courts against the orders of the SERCs. Even in the case of orders passed by the CERC, the statutory provision for appeal is in the high court of the state where the affected party is located. As a result of this, cases have been filed by state power utilities in different high courts against the orders of the CERC. This has led to an increase in litigation. But since cases relating to tariff orders need sector expertise, their disposal is taking time. In some instances, different orders by different high courts have led to contradiction on similar issues.

To avoid these problems and ensure faster redressal, the Electricity Act, 2003 provided for the setting up of an appellate tribunal. Appeals against the orders of the ERCs can be filed only in the appellate tribunal. Since the tribunal would consist of persons from the power sector and the judiciary, and would deal only with cases relating to the power industry, speedier disposal of cases is expected. This will improve the working of the power sector.

S.L. Rao
An appellate tribunal becomes necessary when there are technical issues to be considered that are very complicated and need experts to decide them. That is not the case in electricity disputes. The technical side of looking at facts and applying the law is to be done by the ERCs. If some of them are not doing their work adequately, completely or fairly, that will not be resolved by an appellate body as by a more careful selection of commission members and staff.

In my book, Governing Power, I have considered the decisions of the electricity commissions and found inconsistencies among them, not justified by any special features of their local contexts. Indeed, the superior courts passing judgements on appeal against commission orders have been respectful of the technical expertise of the regulatory commissions but have, in many cases, had to overrule, send back for review or change the commission’s order because of many lacunae. The courts have, in fact, through their orders developed a body of law in dealing with the orders of the electricity commissions. The orders of the ERCs have yet to become a body of regulatory law that can be used in front of different commissions as precedents. I would from my experience and study, prefer to have superior courts instead of an appellate tribunal. The courts can look at law as a whole and at precedents from other judgements, including those of other regulatory commissions.

If it has been difficult to find suitable members for the ERCs, there will be equal difficulty in staffing the appellate tribunal. Over time, if members have long enough tenures, they can develop expertise and review commission orders and try to harmonise them. But that is a very large task since there are so many commissions issuing so many orders. There is no getting away from the electricity commissions having to pull themselves up to be consistent, reasoned and objective.

There is no reason to think that the appellate tribunal will affect the working of the ERCs because it is a purely appellate authority and will take over the work done so far by the different high courts. It has no other authority. If it had an oversight authority for example, in pulling up a commission that has its orders frequently challenged and overruled after hearing, it would be different matter. It might have brought about more considered, reasoned and thoughtful orders. It would be desirable to give it such authority. Today the commissions have no one to pull them up. At least on judicial matters, similar to the authority the high court has over district courts, the appellate tribunal could have authority to review the work of the regulatory commissions.
 

The tribunal does not have the administrative authority earlier given to it under the original version of the Electricity Act, 2003 passed by Parliament. Nor should it. But we have to find a way to make the commissions accountable in the case of charges of improper conduct.

Mohit Saraf
Most often, the issues arising from the orders of the regulatory commissions involve mixed questions of law and technical details, and are industry specific. Hence, those issues are best tackled by an expert who has domain knowledge of law, commerce and industry. Further, most of these issues are placed in such a dynamic and ever-changing scenario that the body sifting through these issues should posses a certain degree of industry-related expertise and understanding. An appellate tribunal, therefore, fits the bill perfectly.

The appellate tribunal would also ensure that only issues of law as are devoid of technicalities are referred to the apex court, thereby providing another forum to address industry-specific concerns. This would mean that the high courts, which are already burdened with pending cases, are not overburdened with regulatory issues. In addition, the appellate tribunal would help to develop a consistent precedent in the sector to ensure regulatory predictability, reduce regulatory risk and harmonise regulatory enforcement across the states. This would, in turn, boost investor confidence and attract investment in this capacity-starved sector.

The appellate tribunal is best suited to address disputes that involve industry-specific and sectoral technicalities and are mixed with legal problems. Usually these issues include disputes relating to tariff fixation, licensing process, interlicensee disputes, etc. However, it needs to be ensured that the appellate tribunal does not become just another tier of decision-making on lines similar to that of the regulatory commissions. To quote an American journalist, “Appeal in law, is to put the dice into the box for another throw.” Let’s hope that the appellate tribunal is more than just another throw of the same dice.

S.S. Sharma
In the opinion of this commission, the provision of the appellate tribunal in the Electricity Act is one of the key provisions aimed at improving the working of the power sector. Presently, any appeal against the directions of the ERCs lies with the high court or the Supreme Court. However, the commission is of the opinion that the appeal courts are not fully equipped to examine and comment on the directions of the commission, as electricity is a very complex subject and often the issues are highly technical in nature and not purely legal. In fact, the Supreme Court in its judgement in the case of the West Bengal Electricity Regulatory Commission versus CESC Limited also felt the need for an effective appellate forum.

R.P. Singh
The Government of India has already established an appellate tribunal as per the Electricity Act, 2003 vide a notification dated April 7, 2004. This appellate tribunal will consist of a chairperson and three other members, including persons with legal, infrastructure and electricity sector, economics, commerce, law and management background. The tribunal is mandated to hear appeals against the orders of the appropriate commission under the act. It has been mandated to dispose of appeals within 180 days from the date of receipt of the appeal, and the tribunal is to record its reasons, in writing, for not disposing of the appeal within this period.

The appellate tribunal, being a body of experts in the field, will definitely help in resolving the issues that affect the working of the power sector as this expert body will be able to decide the issues in a timely manner. Further, there being only one appellate tribunal, all the issues would be address on a single forum unlike in the past where the cases would lie in various high courts all over the country.

In my view, all disputes related to the issues emerging out of various orders issued by the appropriate commissions can be effectively dealt with by the appellate tribunal in view of the expected background of the persons to be appointed as members and the powers conferred on the tribunal by the act.

T.N. Thakur
The act envisages the tribunal like a court of law, where aggrieved parties can appeal against the orders of the appropriate commission. Presently, appeals against orders of the ERCs lie with various high courts. Not only was this time consuming, but it also increased the possibility of differing interpretations and views, increasing regulatory risks. Therefore, improvements will come by virtue of this institutionalised appeal process. In an evolving industry where competition, choice and consumer interest are the keywords for development, this kind of appeal process can be crucial to the pace of development as it would ensure a nodal forum for appeal, which would ensure consistency in treatment.

The tribunal simply adds a vital additional layer of checks and balances to ensure that all players in the development process, including regulators, negotiate the learning curve successfully and approach the development of the market and the industry in line with long-term policy objectives.

What steps can be taken to ensure that the appellate tribunal discharges its functions effectively?

P.N. Bhandari
In order to ensure the independence of various high-level authorities, there is a bar to their reappointment. Thus, the judges of the higher judiciary cannot be reappointed. Under Section 89 of the Electricity Act, even the chairman and members of the regulatory commission cannot be reappointed. But curiously, in the case of the appellate tribunal, under Section 114, the tenure of the chairman and members is of three years and they are eligible for a second tenure of three years. This provision is likely to affect the independence of the tribunal, as only “convenient” members can hope for an extension.

C.P. Jain
There are already many cases pending in different high courts. These are likely to be transferred to the appellate tribunal. Initially there could be a large number of cases with the appellate tribunal. Immediate constitution of the tribunal is necessary to avoid further piling up of cases. For effective working of the tribunal, it is necessary that it functions in a transparent and unbiased manner. The appellate tribunal will have the responsibility to ensure uniformity in the orders of the ERCs. It has to take a holistic view considering different issues of the sector regarding cross-subsidies, capacity augmentation in different areas of generation, transmission and distribution and efficiency improvement.

S.L. Rao
The appellate authority could have been made more effective if it had the authority not merely of hearing appeals but also of judicial oversight. In other words, it should be open to the appellate authority to watch the work of different commissions. If it finds that one or the other is taking excessive time for decisions, has too many pending petitions or has its orders frequently amended or overruled, it should be able to suo moto take it up with the commission concerned. It should be able, in such circumstances, to even report to the commission-appointing authority (the governor for the SERCs and the President for the CERC) about such below-standard work. I am not suggesting that it should have any disciplining powers over the commissions but only that of close oversight over their orders. We do not yet have a mechanism for ensuring accountability of ERCs with reference to issues like declaring assets of members, disclosing major financial transactions, examining allegations of improper conduct, etc. but at least their core work, that is, the orders passed by them, should be subject to the kind of scrutiny I have suggested.

Mohit Saraf
For the appellate tribunal to discharge its functions effectively, it should adhere to the highest standards of independence, accountability and efficient delivery of justice. Therefore, while ensuring that the constituents of the appellate tribunal possess commercial and industrial understanding, it should also be ensured that they are independent of any political or financial interest. The appellate tribunal should also be assured of an independent revenue stream to ensure independence, especially to tackle issues that involve government interest. The appellate tribunal should be guided by rules and regulations that ensure accountability of the whole process and remove arbitrariness from the decision-making.

Any vacancy in the appellate tribunal should be filled with an independent screening process to ensure that the tribunal’s work is not affected by delays in appointment. It is an old adage that justice delayed is justice denied. Therefore, the appellate tribunal’s performance should not be impeded by an overload of pending appeals that can adversely affect the existing and potential investments in the capital-intensive power sector. This may be ensured by devising internal rules for a time-bound justice delivery process.

S.S. Sharma
In the opinion of the commission, in order to ensure that the appellate tribunal discharges its function effectively, it must have specialists from the power sector as its members and experts from other related fields.

Further, considering the geographical spread of the country, the appellate tribunal might be required to set up regional branches/benches to ensure quick and timely disposal of cases.

R.P. Singh
It is a difficult question to reply. However, I can only say that the manning of the appellate tribunal is of utmost importance.

T.N. Thakur
The provisions in the act in this regards, including composition, qualifications of the individual members and the chairperson, and the procedure and powers are comprehensive and should ensure that the tribunal is effective. Of course, like every institution, the tribunal will take the initial time period to reach a critical mass in terms of knowledge base and experience. Selection of individuals to man the positions will always be a key determinant of the success of this process of institution building, and I am sure that the government will be mindful of this aspect.

During the initial period, market participants would do well to employ patience, and appeals against the tribunal’s orders (to the Supreme Court) should be resorted to only in really exceptional situations. Worldwide, experiences show that investment of faith and trust in the working of a new institution is good for the development of the sector, and is to the benefit of all stakeholders in the long run.