Remand Directions Are Guiding, Not Absolute, If Law Evolves: Supreme Court

The Supreme Court has clarified that when a court or an appellate tribunal remands a matter to a subordinate court or adjudicating body for a fresh decision, and refers to certain judicial decisions while doing so, it does not mean that the subordinate authority is bound to follow only those decisions. Court said that this is especially so if, in the meantime, the law has changed or further developed.

A bench of Justices Manoj Misra and Joymalya Bagchi explained that such directions in a remand order should not be ignored altogether. At the same time, they are not absolute. The subordinate court or authority must give due consideration to the directions, unless the binding law on the subject requires a different approach.

The bench observed that when a remand order does not finally decide an issue, the issue remains open and must be decided in accordance with the law applicable on the date of the fresh decision.

Court was dealing with an appeal filed by RattanIndia Power Limited (RPL) challenging an October 6, 2023 order of the Appellate Tribunal for Electricity (APTEL), to the extent that it disallowed carrying cost on a compounding interest basis.

RPL supplies power to Maharashtra State Electricity Distribution Company Limited under two long-term Power Purchase Agreements executed in 2010. It had approached the Maharashtra Electricity Regulatory Commission (MERC) under Section 86 of the Electricity Act, 2003, seeking compensation for various “change in law” events affecting its project from the date it commenced supply of power. RPL also sought carrying cost and requested that compensation be granted from the date supply began.

MERC, however, held that the PPAs executed between MSEDCL and RPL did not provide for compensation towards carrying cost. On this basis, it ruled that RPL was not entitled to claim carrying cost even for approved change in law events.

RPL challenged this decision before APTEL, which remitted the matter back to the State Commission for a fresh decision. Upon reconsideration, MERC partly allowed RPL’s plea, modified its earlier order, and awarded Rs 69.38 crore as change in law compensation, including carrying cost. It directed RPL to raise a supplementary bill and asked MSEDCL to pay the amount in terms of the PPA.

Aggrieved by this order, RPL again approached APTEL. The tribunal partly allowed the appeal through the impugned order, leading RPL to move the Supreme Court.

While examining the appeal, the Supreme Court noted that APTEL has the power to act suo motu under Section 111(6) of the Electricity Act, 2003. In contrast, the Supreme Court’s jurisdiction under Section 125 of the Act can be invoked only through an appeal filed by an aggrieved person.

The bench observed that if a party does not file an appeal or a cross-appeal or cross-objection under Section 125 against an order, or a portion of an order passed by APTEL, it cannot later question the correctness of that part while responding to an appeal filed by another party.

At the same time, court emphasised that statutory limitations cannot dilute the constitutional powers vested in the Supreme Court under Article 136 of the Constitution.

The bench clarified that although the Supreme Court can exercise its powers under Articles 136 and 142 even suo motu to do complete justice, such powers must be exercised only in compelling circumstances. In commercial matters governed by a statutory framework, the court said, constitutional powers should be invoked only in rare and exceptional cases, and not as a routine.

Referring to principles under the Code of Civil Procedure, court said that generally, an appellate court may allow a respondent to challenge adverse findings without filing a separate appeal, unless there is a provision to the contrary. However, where the operative part of the order itself goes against the respondent, the respondent cannot question its correctness without filing an appeal or cross-appeal, particularly when the appellant has limited the challenge to only a specific portion of the order.

Court added that when a person does not file an appeal or cross-appeal, it can be taken that the person is not aggrieved by the operative part of the order challenged by another party.

In the present case, the Supreme Court held that the earlier remand order had not issued any specific direction regarding the application of a particular rate of interest. The observations in the remand order were only in the nature of guidance and did not restrict the powers of MERC or APTEL to decide the issue in accordance with law.

In view of this, the bench deemed it appropriate to remand the matter back to APTEL to decide the issue of compounding of interest based on the facts of the case and in accordance with the law.

Court, however, clarified that the grant of interest at the late payment surcharge (LPS) rate, as directed by APTEL in the impugned order, would not be disturbed. It said that the only issue left open for consideration by APTEL is the question of compounding of interest.

Case Title: Rattanindia Power Ltd Vs Maharashtra State Electricity Distribution Company Ltd & Another

Bench: Justices Manoj Misra and Joymalya Bagchi