Appellate Tribunal For Electricity
M/S Korba Power Limited vs Haryana Electricity Regulatory ... on 23 December, 2025
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO.431 OF 2022
Dated : 23.12.2025
Present: Hon'ble Ms. Seema Gupta, Technical Member (Electricity)
Hon'ble Mr. Virender Bhat, Judicial Member
In the matter of:
M/s Korba Power Limited
Through its Authorised Representative
Mr. Tanmay Vyas (Associate General Manger)
Having its office at,
Flat No.5A, 5th Floor, D. No.6-3-626/1/601,
Parameshwara Apartment, Anand Nagar,
Khairatabad, Hyderabad-500 004 Telangana
Also at Corporate office:
K P Epitome, 4th Floor,
Energy Regulatory and Commercial Group (ERCG)
Anani Power Ltd
Near DAV International School
Makarba, Ahmedabad- 380 051, Gujarat
Email: [email protected] ... Appellant
Versus
1. Haryana Electricity Regulatory Commission
Through its Secretary,
Bays No. 33-36, Sector-4,
Panchkula - 134112, Haryana
Email: [email protected]
2. PTC India Limited
Through its Chairman & Managing Director
2nd Floor, NBCC Tower,
15, Bhikaji Cama Place,
New Delhi - 110066
_________________________________________________________________________________
Appeal No.431 of 2022 Page 1 of 32
Email: [email protected]
3. Haryana Power Purchase Center
(On behalf of M/s Haryana Power
Generation Corporation Ltd.)
Through its Chief Engineer
2nd Floor, Shakti Bhawan,
Sector-6, Panchkula - 134109
Email: [email protected] ... Respondent(s)
Counsel on record for the Appellant(s) : Deepak Khurana
Vineet Tayal
Abhishek Bansal
Nishtha Wadhwa
Bhaskar
Counsel on record for the Respondent(s) : Poorva Saigal
Shubham Arya
Ravi Nair
Shikha Sood
Reeha Singh
Anumeha Smiti
for Res. 3
JUDGMENT
PER HON'BLE MR. VIRENDER BHAT, JUDICIAL MEMBER
1. The instant appeal relates to the claim of the appellant M/s Korba Power Limited for interest for the years 2016 to 2022 on the amounts to which it was found entitled from respondent no.3 by the 1st respondent Haryana Electricity Regulatory Commission as well as by this Tribunal vide various orders passed in different proceedings between the parties. In effect, assail is to the order _________________________________________________________________________________ Appeal No.431 of 2022 Page 2 of 32 dated 12.05.2022 passed by the Commission in petition nos.5/2014 and 3/2016 and review application no.3/2022 wherein the Commission has held that once the principal amount is paid, the interest outstanding thereon does not attract any further interest even though the same is paid after the substantial period of time, thereby overturning its own conclusion reached in previous order dated 03.03.2022 in the same proceedings between the parties wherein the Commission had held that upon payment of principal amount, the interest outstanding and not paid partakes the character of principal and attracts interest. The appellant is also aggrieved by the rate of interest allowed by the Commission.
2. The appellant runs a 300MW coal based thermal power plant in the State of Chhattisgarh and had entered into a Power Purchase Agreement (PPA) dated 19.10.2005 with 2nd respondent PTC India Limited for sale of 273MW power (net power output) from Unit-2 of said power plant. The 2nd respondent PTC separately entered into a Power Supply Agreement (PSA) dated 21.09.2006 with Haryana Power Generation Corporation Limited for sale of power purchased by it from appellant under the above noted PPA.
3. It appears that on account of failure on the part of respondent no.2 to fulfill its conditions precedent under the PPA, the appellant terminated the PPA on 11.01.2011.
_________________________________________________________________________________ Appeal No.431 of 2022 Page 3 of 32
4. We find it apposite to take note of the following proceedings between the parties and the orders passed therein by the Commission as well as by this Tribunal.
5. On 23.01.2015, the Commission passed an order in petition no.05/2014 thereby determining the tariff for the power supplied by appellant during the period commencing from 07.05.2011 till 21.03.2012 as Rs.2.8875/kWh for Financial Year (FY) 2011-2012 and Rs.2.9218/kWh for FY 2012-13. The appellant had been paid a flat tariff of Rs.2.32/kWh for the said period.
6. The said order of the Commission was assailed by both appellant as well as 3rd respondent Haryana Power Purchase Center (HPPC) by filing appeal nos.117/2015 and 107/2015 respectively before this Tribunal.
7. Meanwhile, in pursuance to the order dated 23.01.2015 of the Commission, the appellant filed petition no.3/2016 before the Commission seeking recovery of the differential tariff along with interest. The said petition was disposed off by the Commission vide order dated 12.07.2016 awarding differential tariff to the appellant. However, the Commission did not pass any order qua the interest sought by the appellant on the said principal amount of differential tariff.
_________________________________________________________________________________ Appeal No.431 of 2022 Page 4 of 32
8. Petition filed by appellant for review of order dated 12.07.2016 was dismissed by the Commission vide order dated 27.03.2017.
9. Accordingly, the appellant preferred an appeal bearing no.308/2017 in this Tribunal against the order dated 12.07.2016 of the Commission in so far as interest on the differential amount of tariff was not granted to the appellant.
10. The appeal nos.117/2015 and 107/2015 came to be disposed off by this Tribunal vide common judgment dated 21.03.2018 thereby upholding the tariff order dated 23.01.2015 passed by the Commission except on the issue of Operation & Maintenance (O&M) expenses which had not been granted by the Commission but were allowed in the said judgment. Hence, the matter was remanded back to the Commission for fresh consideration on this aspect.
11. Application filed by the appellant in pursuance to said judgment dated 21.03.2018 of this Tribunal was disposed off by the Commission vide order dated 31.10.2018 thereby allowing the claim for O&M expenses. However, the Commission declined to grant any interest on the differential amount to the appellant.
12. The said order dated 31.10.2018 of the Commission was assailed by the appellant before this Tribunal by way of appeal no.48/2019 in so far as its claim for interest on the differential amount was declined.
_________________________________________________________________________________ Appeal No.431 of 2022 Page 5 of 32
13. Vide judgment dated 22.05.2019, this Tribunal allowed the appeal no.308/2017 of the appellant thereby setting aside the order dated 12.07.2016 of the Commission and holding the appellant entitled to interest on the principal amount of differential tariff as determined vide tariff order dated 23.01.2015. Accordingly, the matter was remanded back to the Commission with a direction to pass further order in the light of observations made by this Tribunal in the said judgment.
14. Vide order dated 27.09.2019 passed by the Commission in the remand proceedings, it granted interest @Rs.9.95% per annum till the date of payment of principal amount. Be it noted here that the principal amount was paid by 3rd respondent HPPC in three installments on 04.08.2016, 04.09.2016 and 04.10.2016.
15. The appellant assailed the said order dated 27.09.2019 of the Commission before this Tribunal by way of appeal no.92/2020 in so far as it restricted the payment of interest only till the date of payment of principal amount. The appellant also challenged the rate of interest.
16. Appeal no.48/2019 (filed by the appellant against the order dated 31.10.2018 of the Commission) was allowed by this Tribunal vide judgment dated 13.01.2022 thereby setting aside the Commission's order dated _________________________________________________________________________________ Appeal No.431 of 2022 Page 6 of 32 31.10.2018 and holding the appellant entitled to interest on the differential amount of O&M expenses allowed by the Commission vide order dated 31.10.2018. Accordingly, the matter was remanded back to the Commission for passing fresh order in this regard.
17. On 03.03.2022, the Commission passed a fresh order in terms of the above noted judgment dated 13.01.2022 of this Tribunal granting interest to the appellant on the differential O&M expenses at the rates as per HERC MYT Regulations.
18. Appeal no.92/2020 also was allowed by this Tribunal vide judgment dated 10.03.2022 thereby setting aside the order dated 27.09.2019 of the Commission and remanding the matter back to the Commission for fresh hearing. Noting that there was some overlap between the issues arising out of remand order dated 03.03.2022 passed by the Commission and the issues involved in the appeal no.92/2022, this Tribunal directed the Commission to pass a comprehensive fresh order after giving liberty to HPPC to file a petition for the review of the order dated 03.03.2022.
19. The review petition bearing no. RA 03 of 2022 filed by HPPC in pursuance to the said judgment dated 10.03.2022 of this Tribunal was decided by the Commission vide order dated 12.05.2022 holding that unless there is a contract _________________________________________________________________________________ Appeal No.431 of 2022 Page 7 of 32 or legislation permitting payment of interest on interest, the same cannot be awarded and therefore, affirmed that the appellant is entitled to interest on the differential tariff, as determined vide order dated 12.07.2016, till the date of payment of principal amount only.
20. The application bearing IA no.14/2022 filed by the appellant seeking clarification of order dated 12.05.2022 was dismissed by the Commission vide order dated 09.08.2022.
21. In this backdrop, the appellant has assailed the order dated 12.05.2022 of the Commission in this appeal.
22. We have heard learned counsel for the appellant as well as the learned counsel for the 3rd respondent HPPC. We have also perused the impugned order, the grounds of appeal and the written submissions filed by the learned counsels.
Our Analysis: -
(A)Period for which interest is payable to the appellant: -
23. It is contended on behalf of the appellant that the appellant's entitlement to interest on the differential tariff as determined by this Tribunal vide judgment dated 22.05.2019 passed in appeal no.308/2017 relates back to the date 12.07.2016 when the Commission held the appellant entitled to differential tariff _________________________________________________________________________________ Appeal No.431 of 2022 Page 8 of 32 but declined to grant any interest upon the same. It is argued that similarly the appellant's entitlement to interest on the differential O&M expenses, allowed by this Tribunal vide judgment dated 13.01.2022 passed in appeal no.48/2019 relates back to the date 31.10.2018 when the Commission allowed the appellant's claim for O&M expenses but declined to grant any interest on the differential amount.
24. The learned counsel for the appellant argued that the payment of interest on these two counts ought to have been made to the appellant in the years 2016 and 2018 respectively but remained to be paid on account of erroneous orders passed by the Commission which were corrected by this Tribunal in above noted two judgments and hence the interest amount was actually paid to the appellant in the years 2019 and 2022 respectively. He would submit that since the appellant was deprived of the interest amount for a considerable period of time, in line with the principles of time value of money as well as restitution and in order to ensure full actual recovery of tariff by the appellant, the appellant is entitled to be compensated by way of interest/carrying cost from the date it actually became due till the date on which such interest amount was actually paid to the appellant in the years 2019 and 2022 respectively.
25. Per contra, it is argued by learned counsel for the 3rd respondent that the claim for compound interest or interest on interest or interest for the period after _________________________________________________________________________________ Appeal No.431 of 2022 Page 9 of 32 the payment of principal amount is clearly not admissible. He submitted that HPPC made payment of interest to the appellant as soon as same was determined by the Commission vide orders dated 12.07.2016 and 31.10.2018 and therefore, there is no failure or default on the part of HPPC. He would argue that the claim for compounding interest or interest on interest is prohibited under Section 3(3)(c) of Interest Act, 1978, and therefore, the claim of the appellant is clearly not admissible. He would refer to the judgment of the Hon'ble Supreme Court in M/s D Khosla & Company v. Union of India (2024) 9 SCC 476 and the judgments of this Tribunal in Gujarat Urja Vikas Nigam Limited v. Essar Power Ltd & Anr., appeal no.138/2021 and Jaigad Power Transco Ltd. v. Maharashtra Electricity Regulatory Commission, appeal no.250/2015, decided on 11.05.2017 cited as 2017 SCC Online APTEL 46 to buttress his submissions.
26. The backdrop in which the impugned order dated 12.05.2022 has been passed by the Commission and the rival submissions made by the learned counsels make us to refer to and consider "Doctrine of Merger" which is a common law principle. As per this doctrine when a superior court, in its appellate or revisional jurisdiction, pronounces a judgment on a matter, the original decision of the lower court merges into the decision of the superior court and the lower court order ceases to have independent existence. Only the judgment of the superior court becomes final, operative and binding. The doctrine applies _________________________________________________________________________________ Appeal No.431 of 2022 Page 10 of 32 when the appellate court affirms, modifies or reverses a decision of lower court, making the appellate court's order final one. Therefore, the judgment of the superior court, which effectively corrects the error that had occurred in the original judgment of the lower court, becomes the final and operative decree.
27. Thus, when a superior court, on appeal awards interest not granted by the lower court and remands the case for calculation to the lower court, the interest generally must run from the date of original judgment of the lower court. This is based upon the principle that the claim of interest, once upheld by the superior court in appeal, was correct and legally tenable and therefore, the claimant ought to be compensated by grant of interest from the initial date when the lower court passed the judgment. Therefore, the lower court, upon remand ought to calculate interest from the date of its original order as the superior court's decision makes the entitlement of interest effective from that earlier point of time. The superior court's judgment effectively corrects the initial order of the lower court and the claimant is entitled to compensation for the period he was deprived of his money. When an appellate court modifies a lower court's decree to include interest, it is typically deemed to have modified the original decree with retrospective effect, meaning thereby that the modified decree is what should have been issued by the lower court initially. The legal maxim "actus curiae neminem gravabit" (an act of the court shall prejudice no man) provides rationale _________________________________________________________________________________ Appeal No.431 of 2022 Page 11 of 32 for the said legal principle. The delay in receiving the correct amount caused by the initial court's error or the time taken in the judicial process should not penalize the claimant. The appellate court's order merges with the original order passed by the lower court, making the corrective terms effective from the date of original lower court's order.
28. Normally, the superior court in its remand order specifies the rate of interest and the effective date. However, in absence of any such effective date in the remand order, the lower court while performing the calculation as per the remand order, ought to apply the interest from the date of its own original order as that is the date from which the entitlement to the full and correct amount was established in law by the appellate court's final determination.
29. It is, therefore, an established legal principle that when a superior court grants interest that the lower court initially denied and remands the case for calculation to the lower court, the interest runs from the date of the original lower court's order.
30. In the instant case, the Commission passed order dated 23.01.2015 thereby determining tariff for the power supplied by the appellant to 2nd respondent, which was higher than the flat tariff being paid to the appellant. _________________________________________________________________________________ Appeal No.431 of 2022 Page 12 of 32
31. Accordingly, in subsequent order dated 12.07.2016, the Commission awarded differential tariff to the appellant but did not pass any order qua interest sought by the appellant on the said principal amount of differential tariff. The error committed by the Commission was corrected by this Tribunal vide judgment dated 22.05.2019 passed in appeal no.308/2017 thereby setting aside the order dated 12.07.2016 of the Commission and holding the appellant entitled to interest on the amount of differential tariff. Accordingly, the matter was remanded back to the Commission to pass consequential orders in this regard.
32. Once the error committed by the Commission in order dated 12.07.2016 in refusing interest on the differential tariff to the appellant was corrected by this Tribunal vide judgment dated 22.05.2019 and the case was remanded for consequential orders as to the calculation of interest to the Commission, the Commission ought to have calculated the interest from the date of its original order i.e. 12.07.2016. Undoubtedly, the judgment of this Tribunal dated 22.05.2019 granting interest on the differential tariff to the appellant would relate back to the date when the original order was passed by the Commission i.e. 12.07.2016 which will be in consonance with the doctrine of merger illustrated hereinabove. The implication of the judgment dated 22.05.2019 of this Tribunal essentially is that the Commission has erred in not granting interest on the differential tariff and accordingly the order dated 12.07.2016 of the Commission _________________________________________________________________________________ Appeal No.431 of 2022 Page 13 of 32 was modified in this regard. When we read the order dated 12.07.2016 of the Commission in juxtaposition to the judgment dated 22.05.2019 of this Tribunal, the logical conclusion would be that the interest on differential tariff allowed by this Tribunal has to be reckoned from the date of Commission's original order i.e. 12.07.2016.
33. Same can be said about the interest on differential O&M expenses which was initially declined by the Commission vide order dated 31.10.2018 but was allowed by this Tribunal vide judgment dated 13.01.2022 passed in appeal no.48/2019. The Commission's order dated 31.10.2018 got merged with the judgment dated 13.01.2022 of this Tribunal and combined reading of both clearly indicates that the appellant is entitled to interest on the differential O&M expenses from the date of original order of the Commission i.e. 31.10.2018.
34. Manifestly, it is not a case where the appellant is seeking compound interest or interest on interest, as contended on behalf of the 3rd respondent. What the appellant is seeking is to be compensated for the time value of money i.e. the interest amount to which it was found entitled with effect from 12.07.2016 and 31.10.2018 respectively, but has been paid to it after a long lapse of time. It is true that the Payment of Interest Act, 1978 as well as the relevant regulations prohibit levy of interest on interest or compound interest. However, it needs to be kept in mind that this prohibition applies when both principal as well as _________________________________________________________________________________ Appeal No.431 of 2022 Page 14 of 32 interest remains unpaid. It is in such situation that the interest for the future period is to be reckoned on the principal amount only and not on the entire amount due including the interest for the past period. This prohibition does not apply in a situation where the principal is paid but the interest remains to be paid for a substantial period of time. In case, the benefit of such prohibition is extended to the situations like that involved in the case at hand, it would be convenient for any person or entity to pay the principal amount and defer the payment of interest for inordinately long time with the assurance that no further interest would be charged on the unpaid interest amount. In that case, the unpaid interest after payment of principal amount, would partake the character of principal upon which interest would be levied till the date it is paid.
35. We may also note that payment of "interest" cannot be equated to payment of penalty or fine. "Interest" is normal accretion to money when invested lawfully by the person in whose hands it is. When a person is deprived of the use his money to which he is lawfully entitled, he would have a legitimate claim for interest upon such amount of money for the period during which he was deprived of its use. In other words, any person who has enriched himself by use of the money belonging to some other person, is legally duty bound to compensate the latter by payment of interest on the said money, from the use of which he had been deprived. Payment of interest is a necessary corollary to _________________________________________________________________________________ Appeal No.431 of 2022 Page 15 of 32 the return on money retained by a person unjustly or unlawfully. This has been explained by the Supreme Court succinctly in Alok Shanker Pandey v. Union of India & Ors. (2007) 3 SCC 545 by way of the following illustrations: -
"For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B. With these observations the impugned judgment is modified and the appeal is disposed of accordingly."
36. In the case at hand, it is limpid that the appellant was deprived of the use of interest amount on the differential tariff from 12.07.2016 till actual payment and on differential O&M expenses from 31.10.2018 till actual payment. The third respondent, on its part, got unjustly enriched by the said amount of money to which it was not entitled at all and also must have earned further on the said _________________________________________________________________________________ Appeal No.431 of 2022 Page 16 of 32 amount by investing it wisely as per financial advice so received. The appellant was deprived of interest amount for a considerable period of time and therefore, in order to ensure full actual recovery of tariff by the appellant and keeping in mind the principle of time value of money as well as the restitution, the appellant is entitled to be compensated by way of interest/carrying cost from the date on which it had become due till the date on which such interest amount was actually paid to the appellant in the years 2019 and 2022 respectively.
37. It is true that the appellant's prayer before this Tribunal in appeal no.308/2017 was for grant of interest till the actual date of payment of differential tariff and not till the date of payment of the interest amount. However, we feel that once we have held the appellant entitled to interest on the unpaid interest amount during the entire period of delay, the payment of interest cannot be limited to the period till date of payment of differential tariff only. Direction to the 3rd respondent to pay interest on the unpaid interest amount during the entire period of delay would definitely come within the ambit of "such other or further orders" claimed in prayer (c) in said appeal no.308/2017.
38. The Supreme Court, in latest judgment dated 27.08.2024 in Bangalore Electricity Supply Company Limited v. Hirehalli Solar Power Project LLP & Ors. Civil Appeal nos.7608 of 2021 and 6386 of 2021 has directed payment of Late _________________________________________________________________________________ Appeal No.431 of 2022 Page 17 of 32 Payment Surcharge (which is analogous to interest) even though the same had not been pleaded by the claimants in that case. The relevant portion of the judgment is quoted hereinbelow: -
"14. Lastly, we also reject the appellant's contention that the APTEL's direction to pay late payment surcharge to the respondents is unjustified since the same was not pleaded. As we have already held, the APTEL rightly restored the tariff of Rs. 8.4 per unit and directed the appellant to pay the difference amount. The direction to pay the late payment surcharge on this amount is explicitly rooted in the PPA, and hence, is in furtherance of the intention of the parties. There is no reason to set aside the same."
(Emphasis supplied)
39. In this context, we also find the following observations of the Hon'ble Supreme Court in a recent judgment dated 18.02.2025 in Dr. Purnima Advani and Anr. v. Government of NCT and Anr. Civil Appeal No.2643 of 2025, very material: -
_________________________________________________________________________________ Appeal No.431 of 2022 Page 18 of 32 "25. If on facts of a case, the doctrine of restitution is attracted, interest should follow. Restitution in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order what has been lost to him in execution of decree or order of the Court or in direct consequence of a decree or order. The term "restitution" is used in three senses, firstly, return or restoration of some specific thing to its rightful owner or status, secondly, the compensation for benefits derived from wrong done to another and, thirdly, compensation or reparation for the loss caused to another.
26. In Hari Chand v. State of U.P., 2012 (1) AWC 316, the Allahabad High Court dealing with similar controversy in a stamp matter held that the payment of interest is a necessary corollary to the retention of the money to be returned under order of the appellate or revisional authority. The High Court directed the State to pay interest @ 8% for the _________________________________________________________________________________ Appeal No.431 of 2022 Page 19 of 32 period, the money was so retained i.e. from the date of deposit till the date of actual repayment/refund.
27. In the case of O.N.G.C. Ltd. v. Commissioner of Customs Mumbai, JT 2007 (10) SC 76, (para 6), the facts were that the assessment orders passed in the Customs Act creating huge demands were ultimately set aside by this Court. However, during pendency of appeals, a sum of Rs.54,72,87,536/- was realized by way of custom duties and interest thereon. In such circumstances, an application was filed before this Court to direct the respondent to pay interest on the aforesaid amount w.e.f. the date of recovery till the date of payment. The appellants relied upon the judgment in the case of South Eastern Coal Field Ltd.
v. State of M.P., (2003) 8 SCC 648.
This Court explained the principles of restitution in the case of O.N.G.C. Ltd. (supra) as under: -
"Appellant is a public sector undertaking.
Respondent is the Central Government. We agree _________________________________________________________________________________ Appeal No.431 of 2022 Page 20 of 32 that in principle as also in equity the appellant is entitled to interest on the amount deposited on application of principle of restitution. In the facts and circumstances of this case and particularly having regard to the fact that the amount paid by the appellant has already been refunded, we direct that the amount deposited by the appellant shall carry interest at the rate of 6% per annum. Reference in this connection may be made to Pure Helium Indian (P) Ltd. v. Oil & Natural Gas Commission, JT 2003 (Suppl. 2) SC 596 and Mcdermott International Inc. v. Burn Standard Co. Ltd. JT 2006 (11) SC 376."
40. Thus, where there is an order for restitution by way of return or restoration of some specific money or thing to its rightful owner, the direction to pay interest must follow. It is noteworthy that in the case of O.N.G.C. Ltd. v. Commissioner of Customs Mumbai, JT 2007 (10) SC 76 (referred by the Supreme Court in the above noted judgment), the application for payment of interest was filed for the first time before the Supreme Court during the pendency of the appeal, which was entertained and allowed by the Supreme Court.
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41. It is to be noted that the judgment of the Supreme Court in M/s D Khosla & Company (supra) as well as judgments of this Tribunal in Gujarat Urja Vikas Nigam Limited (appeal no.138/2021) and Jaigad Power Transco Ltd. (appeal no.250/2015) cited on behalf of the 3rd respondent are not relevant to the instant appeal for the reason that the facts of those cases are clearly distinguishable from the facts involved in the instant appeal as narrated hereinabove.
42. In view of the facts and circumstances of the case, illustrated hereinabove and considering the legal position on the aspect under consideration enunciated by the above noted judgment of the Supreme Court, we feel of the opinion that the impugned order of the Commission suffers from a patent error in so far as it holds appellant entitled to interest on the differential tariff and differential O&M expenses till the date of payment of principal amount. The unpaid interest as on date of payment of principal amount would also attract interest at the applicable rate till the date entire interest amount is paid. (B) Applicable rate of interest: -
43. The appellant is also aggrieved by the rate of interest allowed by the Commission in the impugned order.
44. The issue relates to the rate of interest applicable for the period FY 2011- 2012 to FY 2012-2013 and FY 2016-2017 to FY 2019-2020. On this aspect, the Commission has held in the impugned order as under: -
_________________________________________________________________________________ Appeal No.431 of 2022 Page 22 of 32 "
..............
To bring clarity to the applicable rate of interest, the Commission orders that from FY 2011-12 to 2015-16, the applicable rate shall be SBI base rate plus a margin of 150 basis points. With effect from FY 2016-17 to 2021-22, MCLR of the relevant financial year plus 150 basis points shall be applied for computation of interest. The figures given by the Respondent in the tabular statement above shall be verified by the parties. The Commission, therefore, allows the rate of interest as interest on working capital specified in terms of MYT regulations, as amended, from time to time. The appropriate margin applicable for the computation of such interest shall be considered as 150 basis points."
45. It is argued on behalf of the appellant that the appellant had claimed interest as per the average rate of interest on working capital for the relevant financial years which is as per the settled regulatory norms. However, it is noteworthy that the appellant had concededly consented to rate of interest being in line with MYT Regulations of the Commission as amended from time to time. _________________________________________________________________________________ Appeal No.431 of 2022 Page 23 of 32 Said concession given by the appellant has been recorded by the Commission in the order dated 03.03.2022 and is extracted hereinbelow: -
"During the course of the arguments, the petitioner specifically stated that they are agreeable to the award of the rate of interest in line with MYT Regulations of the Commission, as amended, from time to time. The Respondent, however, contended that the rate of Interest should not exceed 9.95% simple, interest, as allowed by the Commission in its order dated 27.09.2019. This contention of Respondent-HPPC does not find merit, with the Commission. Although, the Commission in its Order dated 27.09.2019, had allowed simple interest rate of 9.95% in parity with the latest rate of carrying cost allowed to the State Generator, HPGCL, by this Commission in its Order dated 18.09.2019 in case no. RA 8 of 2019. yet, on fresh consideration of the matter, the Commission finds it appropriate to consider well-settled regulatory principle of awarding interest at the rate specified in the regulatory framework. This shall adequately compensate the Petitioner-LAPL in terms of the Order of the Hon'ble _________________________________________________________________________________ Appeal No.431 of 2022 Page 24 of 32 APTEL, In view of the consent given by the petitioner with respect to the award of the rate of interest in line with MYT Regulations, the Commission need not delve into the relevance of documents i.e. auditor's' certificate, relied upon by the petitioner in support of its claim."
46. It is submitted on behalf of the appellant that despite the same, the Commission has erroneously observed in the impugned order that applicable rate of interest from FY 2016-2017 to FY 2021-2022 shall be MCLR of relevant FY plus 150 basis points instead of SBI base rate plus1.5% margin as per the applicable HERC MYT Regulations 2012 which were applicable from 01.04.2013 to 31.03.2020.
47. We have already noted hereinabove that the appellant had filed an application bearing no.14/2022 seeking clarification on the impugned order dated 12.05.2022 with regards to the rate of interest, which was dismissed by the Commission vide order dated 09.08.2022. In the said order dated 09.08.2022, the Commission has observed and held as under: -
"Upon hearing the rival contentions, the Commission observes that the difference in the respective stand of the petitioner and the respondent before this Commission, is _________________________________________________________________________________ Appeal No.431 of 2022 Page 25 of 32 in the rate of interest to be applied for the period from financial year 2011-12 to 2012-13 and financial year 2016- 17 to 2019-20. However, there is no dispute on the applicable interest rates to be applied for the period from the financial year 2013-16 and financial year 2020-22 and both the parties agree on the same terms. The Commission could recollect the oral submissions of the applicant during the hearing (which led to the passing of the Impugned order dated 12.05.2022) that they have no objection to the proposal of HPPC so far as the rate of Interest is concerned and the arguments were given on the other issue viz "applicability of Interest on interest".
Therefore, the applicant was not expected to seek clarification of the impugned order dated 12.05.2022 particularly when the same has been specified In the order dated 03.03.2022 that the applicable rate of interest, in the instant case, shall be as per the HERC MYT Regulations, as amended from time to time i.e. MCLR of the relevant financial year plus a maximum of 150 basis points. The clarification of the words "HERC MYT Regulations, as amended from time to time i.e. MCLR"
_________________________________________________________________________________ Appeal No.431 of 2022 Page 26 of 32 Is inherent in the Commission's order dated 03.03.2022 where it has been specified that applicable rate is "MCLR"
since the date it was introduced i.e. 01.04.2016 (although it was mentioned In the HERC MYT Regulations, 2019).
The Commission in its Impugned order has specifically provided that interest rate for the period prior to introduction of "MCLR", shall be based on "Base Rate"."
48. In this regard, further clarification has been given by the Commission in Paragraph no.8 of the said order dated 09.08.2022 which is extracted hereinbelow: -
"8. The Commission observes that 'rate of interest' in whatever form i.e. Prime Lending Rate, Base Rate, MCLR etc. reflects the cost of capital and at times a margin is allowed to balance the additional risks that the lender may perceive on a case to case basis. Hence, the same is reflected in the benchmarks set by the sectoral regulators. In the present case, the margin of 1.5% over and above the base/MCR rate was allowed. The difference between the parties has crept in as different set of tariff regulations were in force from time to time. In 2008, the commission _________________________________________________________________________________ Appeal No.431 of 2022 Page 27 of 32 had Tariff Regulations in place, i.e. Haryana Electricity Regulatory Commission (Terms and Conditions for Determination of Generation tariff) Regulations, 2008, which specify the interest on working capital applicable i.e. short-term Prime Lending Rate of State Bank of India as applicable on 1st April of the year in which the generating station or a unit thereof is declared under commercial operation. Further in 2012, there was requirement for multi-year tariff regulations, therefore, the Hon'ble Commission notified the Multi Year Tariff Regulations on 05.12.2012, applicable from 01.04.2013. Further in 2019, the Commission notified the Multi Year Tariff Regulations 2019 applicable from 01.04.2020 onwards.
While passing the order, against which the present clarification application has been moved by LAPL, the Commission was aware of the need to make things crystal clear. Hence, as a matter of abundant prudence, the following was provided in the impugned order dated 12.05.2022: -
_________________________________________________________________________________ Appeal No.431 of 2022 Page 28 of 32 "To bring clarity to the applicable rate of Interest, the Commission orders that from FY 2011-2012 to 2015-2016, the applicable rate shall be SBI base rate plus a margin of 150 basis points. With effect from FY 2016-17 to 2021-22, MCLR of the relevant financial year plus 150 basis points shall be applied for computation of interest."
Evidently, the order (supra) provided for the following dispensation: -
i) For the period from FY 2011-12 to the FY 2015-16: SBI base rate + 1.5% margin.
ii) For FY 2016-17 to the FY 2021-22: MCLR + 1.5% margin.
The Base Rate (Multi Year Tariff Regulations, 2012), as it is widely understood is a cap on the lending i.e. the banks may not lend below the base rate declared by it. Whereas, the prime lending rate (Tariff Regulations, 2008) is a rate, declared by the banks, at which the banks may extend loans to creditworthy borrowers. The latter considers the cost of funds to the banks as well as a margin depending _________________________________________________________________________________ Appeal No.431 of 2022 Page 29 of 32 on the risk profile of the borrowers. Margin over the base rate, which logically, will be lower than the PLR, is justified from the prudence check perspective. Consequently, the Commission, in order to balance the equity on both the sides and to protect the interest of the electricity consumers in Haryana, who bear the ultimate burden of any costs / additional cost associated with power purchase, after due deliberations provided for base rate + 1.5%. Further, the Commission is also conscious of the fact that MCLR came into effect w.e.f. 01.04.2016, substituting the concept of 'Base Rate'. Hence, for the ensuring financial years the Commission, considering the fact that the underlying principles for both the base rate MCLR are the same, allowed Interest on the basis of MCLR/Base rate and retained 1.5% margin over and above the applicable rate. This dispensation i.e. change in methodology was effected in the MYT Regulations, 2019 which was a re-enactment of the MYT Regulations, 2012. Consequently, in order to avoid any iota of doubt the Commission specifically clarified the issue in its Impugned order dated 12.05.2022. The operational part _________________________________________________________________________________ Appeal No.431 of 2022 Page 30 of 32 of the clarification has already been re-produced earlier in the present order. Needless to add, that computation and Implementation of MCLR is more prudent, appropriate and precise than the 'base rate'. Prior to MCLR, the banks computed the 'base rate' in a variety of ways which lacked standardization. The Central Bank (SBI) has certainly improved upon the process for pricing credit by standardizing the benchmark rates across all tenors by Introducing MCLR and hence providing a consistent Interest rate structure and thereby improving transparency.
In view of the above discussion, the commission, therefore, clarifies its stand stated in the Impugned order dated 12.05.2022 that computation of interest cost from the financial year 2011-12 to the financial year 2015-16 shall be based on the SBI base rate and from financial year 2016-17 to the financial year 2021-22 shall be based on MCLR with 1.5% margin, being more transparent and considers the principles of equity and restitution, in line with the HERC MYT Regulations, 2019."
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49. Having regard to such clarifications/observations of the Commission on the aspect of rate of interest, we do not find any force in the contentions of the appellant on this aspect of the matter.
Conclusion: -
50. In view of above discussion, we are unable to sustain the impugned order of the Commission in so far as it holds the appellant entitled to interest till the date of payment of principal amount only. We hold the appellant entitled to the interest on the differential tariff from the date it became due i.e. 12.07.2016 and on the differential O&M expenses from the date it became due i.e. 31.10.2018 till the date of payment of the entire interest amount. Any amount of interest which had remained unpaid as on the date of payment of principal amount by the 3rd respondent shall also carry interest at the rate allowed by the Commission till the date entire interest amount stands paid. However, we affirm the rate of interest as granted by the Commission vide the said impugned order.
51. Accordingly, the impugned order of the Commission stands set aside and the appeal stands partly allowed to the extent indicated hereinabove.
Pronounced in the open court on this the 23rd day of December, 2025.
(Virender Bhat) (Seema Gupta)
Judicial Member Technical Member (Electricity)
✓
REPORTABLE / NON-REPORTABLE
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