Appeal No.210 of 2015. Case: Neyveli Lignite Corporation Ltd. Vs Central Electricity Regulatory Commission and Ors.. APTEL (Appellate Tribunal for Electricity)

Case NumberAppeal No.210 of 2015
CounselFor Appellant: Mr. M G Ramachandran Ms. Poorva Saigal Ms. Anushree Bardhan Ms. Ranjitha Ramchandran Mr. Shubham Arya and Mr. J. Dhanasekaran Counsel and For Respondents: Mr. K S Dhingra and Mr. S. Vallinayagam for R-2 Mr. P V Dinesh Ms. Arushi Singh Mr. Rajesh Mr. M T George Ms. Prerana Chaturvedi Mr. M G Yoganand, Advs.
JudgesMrs. Ranjana P. Desai, Chairperson and Mr. I.J. Kapoor, Technical Member
IssueCompanies Act, 1956; Electricity Act, 2003
Judgement DateMay 15, 2017
CourtAPTEL (Appellate Tribunal for Electricity)


Mr. I.J. Kapoor, Technical Member

  1. The present Appeal is being filed by M/s Neyveli Lignite Corporation Ltd.(hereinafter referred to as the "Appellant") under Section 111 of the Electricity Act, 2003 challenging the Order dated 10.6.2015 ("Impugned Order") passed by the Central Electricity Regulatory Commission (hereinafter referred to as the "Central Commission"),in Review Petition No. 6 of 2011 filed for review of the Central Commission''s earlier Order dated 31.08.2010 (Main Order) in Petition No. 230 of 2009 related to determination of tariff for 2009-14 period for Neyveli Lignite Corporation (NLC) Thermal Power Station-I Expansion (2x210 MW) (hereinafter referred as the ''Expansion Station''). The present Appeal is concerning about the disallowance of additional capital expenditure on spare TG/ Turbine Rotor projected during the year 2013-14.

  2. The Appellant, M/s Neyveli Lignite Corporation Ltd. is a Govt. of India Enterprise, a company incorporated under Companies Act, 1956, with its registered office at Chennai, Tamil Nadu.

  3. The Respondent No.1 is Central Electricity Regulatory Commission, exercising jurisdiction and discharging functions in terms of the Electricity Act, 2003.

  4. The Respondent Nos. 2 to 5 are the beneficiaries of the Expansion Station of the Appellant.

  5. Facts of the present Appeal:

    1. The Appellant has set up 2x210 MW Expansion Station with Commercial Operation Date (COD) of Unit#1 as 9.5.2003 and COD of Unit#2 as 5.9.2003.

    2. The Appellant filed a Petition No. 230 of 2009 (hereinafter referred as ''Main Petition'') before the Central Commission on 14.10.2009 for determination of tariff of its Expansion Station in terms of CERC (Terms and conditions of Tariff), Regulations, 2009 (hereinafter referred as ''Tariff Regulations, 2009''). The Appellant on 17.2.2010 filed amendment to the said Petition after carrying out changes necessitated due to Central Commission''s Order dated 18.12.2009 in Petition No. 14 of 2009 for consideration of opening capital as on 1.4.2009.

    3. The Central Commission vide order dated 31.8.2010 (Main Order) in Petition no. 230 of 2009 determined the tariff of the Expansion Station. While doing so the Central Commission disallowed additional capitalisation of Rs. 40 Cr. projected by the Appellant during the year 2013-14 for a spare TG/ Turbine rotor.

    4. The Appellant filed a Review Petition No. 6 of 2011 against the Main Order on 6.12.2010 with the Central Commission. In this petition for the first time the Appellant disclosed that the turbine rotor of Unit#1 had developed cracks and the requirement of spare turbine rotor is essential for sustained performance of the plant. The Appellant also submitted that the price of the turbine rotor is Rs. 100 Cr. as against Rs. 40 Cr. projected in Main Petition. The Central Commission vide its order dated 7.6.2013 in the Review Petition again rejected the claim of the Appellant for capitalisation of the spare TG/ Turbine rotor.

    5. Aggrieved by the Review Petition order dated 7.6.2013 read with Main Order, the Appellant on 5.8.2013 filed an Appeal No. 201 of 2013 before this Tribunal. The Appellant in this appeal contended that the Central Commission had not considered the submissions made by it vide affidavit dated 6.1.2012 while issuing the order dated 7.6.2013. This Tribunal vide Judgement dated 14.7.2014 in this appeal, without expressing any opinion, remanded the matter to the Central Commission with specific direction for fresh consideration of the issues related to the affidavit dated 6.1.2012 submitted by the Appellant to the Central Commission during proceedings of the Review Petition.

    6. The Central Commission vide order dated 10.6.2015 (Impugned Order) in Review Petition No. 6 of 2011 in respect of the Central Commission''s Order dated 31.8.2010 again rejected the claim of the Appellant regarding capitalisation of the spare TG/ Turbine rotor after dealing with the issues as per directions of this Tribunal.

    7. Aggrieved by the Impugned Order dated 10.6.2015 passed by the Central Commission, the Appellant has preferred the present appeal.


    The Appellant has raised the following question of law in the present appeal: Whether in the facts and circumstances of the case the Central Commission has rightly disallowed the additional capital expenditure claimed by the Appellant as set out in facts in issue at Para 8 (i)? Facts in issue at para 8 (i) of the instant Appeal: Disallowance of total capital expenditure amounting to Rs. 100 Crores incurred by the Appellant for the purchase of spare TG/ Turbine rotor for the year 2013-14.Appeal No.210 of 2015 Page of

  7. We have heard at length the learned counsel for the parties and considered carefully their written submissions, arguments put forth during the hearings etc. Gist of the same is discussed hereunder.

  8. The learned counsel for the Appellant has made following arguments/submissions for our consideration on the issues raised by it:

    1. The Central Commission has not considered the matter as per the judgement dated 14.7.2014 of this Tribunal directing that the claim of the Appellant to be considered in the light of the affidavit dated 6.1.2012 filed by it. In this affidavit, the Appellant has given in detail the reasons and justifications that why the development of cracks in the turbine rotor is not attributable to the Appellant. This affidavit also dealt with allegations made by M/s Ansaldo, the Original Equipment Manufacturer (OEM) stating therein that its recommendations for preservation of steam turbine has not been followed by the Appellant. The Central Commission without examining the details provided by the Appellant, in the said affidavit, as per directions of this Tribunal, only on the basis of the observations of M/s Ansaldo again denied the claim of the Appellant.

    2. The Central Commission in the Impugned Order has concluded that the actual reasons for development of cracks was still to be ascertained. However, the Central Commission on this basis held that the Appellant has not made out the case that the damage to the turbine rotor was beyond its control. The Central Commission failed to appreciate the reasons given in affidavit dated 6.1.2012 and submissions made before it which establishes that the developments of cracks on turbine rotor are not attributable to the Appellant. The actual reasons of the cracks, being not known, should not lead to the conclusion that the Appellant is responsible for the cracks. The Central Commission also failed to record the reasons which could conclude that cracks on the turbine rotor were due to the Appellant.

    3. The Central Commission has wrongly proceeded on the basis that the data regarding steam and water parameters after COD of the Expansion Station was not furnished to M/s Ansaldo. The Central Commission during the course of hearings had not sought any clarification on action taken by the Appellant in response to query by M/s Ansaldo. This too particularly when the Central Commission had sought clarifications on various other aspects which were furnished to the Central Commission. The Appellant had extended full co-operation and submitted the details required by M/s Ansaldo from time to time. In case of any inadequate data M/s Ansaldo could have asked the Appellant for the same.

    4. The Central Commission too during the course of hearing did not ask the Appellant for furnishing information asked by M/s Ansaldo and the details submitted by the Appellant in response to that. This has led to the wrong conclusion by the Central Commission that the Appellant had not submitted adequate information because of which reasons for cracks on the turbine rotor could not be determined either by the Appellant or by M/s Ansaldo. The Appellant had followed all the chemical regime, frequency domain and load...

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