Supreme Court Says Appellate Tribunal 'Gone Haywire'; Can It Defy Binding Precedent?
NEW DELHI: The Supreme Court of India on 30 October 2026 set aside a 2024 order of the Appellate Tribunal for Electricity that had reviewed and reversed its own 2019 ruling on the Damodar Valley Corporation's tariff for 2009 to 2014, holding that the review was "clearly illegal, totally misplaced and blatantly in breach of the principles of judicial discipline" and a violation of Article 141 of the Constitution.
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran allowed the Corporation's appeal, restored the Tribunal's original order dated 17 May 2019, and imposed costs of Rs. 2,00,000 on Maithan Alloys Limited and Rs. 1,50,000 on the Steel Authority of India Limited, which had intervened in support of the review order. The Court said that the Tribunal "has gone haywire".
Case at a Glance
Case Title: Damodar Valley Corporation v. Maithan Alloys Limited & Ors.
Case No.: Civil Appeal No. 11106 of 2024
Citation: 2026 INSC 1178 (marked reportable)
Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran (judgment authored by Justice K. Vinod Chandran)
Date of Judgment: 30 October 2026
What Was Challenged: The 2024 order of the Appellate Tribunal for Electricity, New Delhi, allowing a review petition against its own order dated 17 May 2019 on the tariff of the Damodar Valley Corporation for 2009 to 2014
Core Dispute: Whether the Corporation's Sinking Fund contribution can be recovered through tariff along with depreciation, and whether the Tribunal could review its order on that ground despite a binding Supreme Court precedent
Appearing: Mr. Vikas Singh and Dr. Abhishek Manu Singhvi, learned senior counsel, for the appellant; Mr. Rajiv Shakdher, learned senior counsel, for the Steel Authority of India Limited; Mr. Rajiv Yadav, learned Advocate-on-Record, for the first respondent
The Question Behind the Headline
Can a statutory tribunal revisit a settled tariff order, five years later, by finding an error that the Supreme Court itself had not noticed? The Court answered with unusual sharpness. It opened the judgment by saying it does "come across orders akin to the one impugned, which is in blatant breach of judicial discipline", and that this raises serious doubts about independence versus accountability.
The answer to the title is no. A tribunal cannot defy a binding precedent of the Supreme Court under Article 141, and it cannot use its review power to correct an order merely because it thinks the earlier view was wrong. The Court also held, on the merits, that the Sinking Fund and depreciation are both permissible under the Damodar Valley Corporation Act, 1948, so there was no double benefit to correct in the first place.
Background
The Tariff Dispute
The Central Electricity Regulatory Commission fixed the tariff of the Damodar Valley Corporation for the period 2009 to 2014 under the Electricity Act, 2003, the Damodar Valley Corporation Act, 1948 and the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009. The same issue, whether the Sinking Fund, which is a portion of profits appropriated to redeem the Corporation's bonds, can be factored into tariff, had already been considered and upheld by the Supreme Court in Bhaskar Shrachi Alloys Limited & Ors. v. Damodar Valley Corporation & Ors., (2018) 8 SCC 281, for an earlier period.
The Appellate Tribunal's Two Orders
The Commission passed its order for the later period in 2013. When the consumers' appeals were decided by the Appellate Tribunal for Electricity on 17 May 2019, the Bhaskar Shrachi decision had already been delivered, and the Tribunal upheld the Commission's order on its own reasoning and on that binding precedent. No one challenged that order before the Supreme Court. One of the consumers, Maithan Alloys Limited, instead filed a review, which sat before the Tribunal for five years and was then allowed in 2024.
The review order ruled that the Corporation could claim only one of two elements, either the Sinking Fund contribution as an expense in tariff or depreciation on capital assets created with the bond money, since claiming both amounted to a double benefit. The Tribunal also noted that the double benefit point had escaped the attention of the Supreme Court. The Corporation appealed, and the Steel Authority of India Limited, a public sector undertaking, intervened.
Arguments Before the Supreme Court
For the Damodar Valley Corporation
The Corporation argued that the review was made after five years, in the face of a binding precedent, and that the Sinking Fund is an expense permissible in tariff under the statutory provisions. It pointed out that, in addition to generating power, it is statutorily bound to ensure flood control, irrigation and the development of the valley.
For the Consumers and the Steel Authority
The respondents argued that permitting depreciation on assets and also allowing the Sinking Fund as an expense gives a double benefit that burdens consumers and enriches the Corporation. Relying on the Companies Act, they said that depreciation is a charge on profits reckoning the wear of capital assets, and that a reserve fund to redeem bonds can only be appropriated out of profits and cannot be treated as an expense for tariff, especially when assets bought with bond money also earn depreciation.
What the Supreme Court Held
The Court first examined the earlier decision for its own satisfaction, because if the coordinate Bench had committed an error, it could refer the matter to a larger Bench. It found no reason to doubt Bhaskar Shrachi Alloys. It then examined whether the review could stand.
Issue One: Was the Review Legally Permissible?
No. The Court held that the review overstepped every limit recognised in law.
The Review Standard
Relying on State of West Bengal v. Kamal Sengupta, (2008) 8 SCC 612, the Court reiterated that the power to review under Section 22(3)(f) of the Administrative Tribunals Act, 1985, which is in pari materia with Section 122(f) of the Electricity Act, is akin to the power under Order 47 Rule 1 of the Code of Civil Procedure. An error that is not self-evident and needs a long process of reasoning cannot be an error apparent on the face of the record, and an erroneous decision cannot be corrected in the guise of review.
Why the Tribunal's Order Failed
The Court noted that the first respondent's own review petition said it did not impugn the Sinking Fund allowance as a pass through in tariff since the issue was no longer open after Bhaskar Shrachi. It also found that the Tribunal's original order had already dealt with the contention of double allowance specifically, and that this Court, in Bhaskar Shrachi, had accepted both the depreciation and the Sinking Fund as items under Section 40 of the Damodar Valley Corporation Act. The review therefore had no foundation.
Article 141 and Judicial Discipline
The Court held that the review was "clearly illegal, totally misplaced and blatantly in breach of the principles of judicial discipline". Article 141 is a constitutional imprimatur that ensures the decisions of the highest court are followed, without which there will be mayhem. The Court added that it is conscious of the criticism that its decisions are supreme not because it is infallible but because it is the final court, yet finality and closure are the expedient need in litigation.
Issue Two: Was There Any Double Benefit on the Merits?
No. The Court held that the Sinking Fund, although in the nature of a reserve fund, is allowed to be treated as a first charge under the Corporation's own statute, and can therefore be recovered through tariff along with depreciation.
The Statutory Scheme
The Court agreed with Bhaskar Shrachi that the fourth proviso to Section 14 of the Electricity Act preserves the Damodar Valley Corporation Act, 1948 to the extent it is not inconsistent with the 2003 Act. Section 174 of the Electricity Act nullifies only inconsistent provisions of the earlier law and does not repeal it, so the Corporation could not determine its own tariff under Section 20 of its Act, but its other provisions continue.
Section 40 and Regulation 43
Section 40 of the Damodar Valley Corporation Act requires provision for depreciation and for reserve and other funds, at rates specified by the Auditor-General of India, before net profit is determined. Regulation 43 of the 2009 Tariff Regulations specifically applies the depreciation rate stipulated under Section 40 and treats the funds established under it as items of expenditure recoverable through tariff. The Court held that Section 40 is consistent with Section 61 of the Electricity Act.
The First Charge Departure From Accounting Principles
The Court explained that the statute makes a clear departure from general accounting principles. The Sinking Fund, though a reserve fund constituted only to redeem the bonds, is allowed as a first charge deductible before arriving at net profit, so it can be factored in tariff as an expenditure. The assets bought with the bond proceeds also get depreciation, and the Tribunal's original order had dealt with the double allowance argument and rejected it.
Costs and Final Orders
The Court set aside the impugned decision and restored the Tribunal's order of 17 May 2019. It observed with some consternation that no appeal was filed against the earlier order and that one consumer waited five years for its review, describing this as an abuse of process of law. It imposed costs of Rs. 2,00,000 on the first respondent. It also noted that the Steel Authority of India Limited, a Maharatna public sector undertaking, willingly joined the attempt to uphold an order passed in breach of judicial discipline and Article 141, and imposed costs of Rs. 1,50,000, payable to the Damodar Valley Corporation within one month, failing which interest at 18 percent per annum applies. The appeal was allowed with costs and pending applications were rejected.
Key Lines From the Judgment
"We cannot but observe that the Tribunal has gone haywire; we are apologetic for the expression but we find no substitute to express our angst in allowing the review."
"Our judicial system with the hierarchy of Courts thrives on the sanctity of the decisions of the appellate, revisional and supervisory jurisdictions to be given due weightage."
"As far as Article 141 is concerned it's a Constitutional imprimatur which ensures the decisions of the highest court of the land to be followed, without which there will be mayhem."
"However, finality and closure is the expedient need in litigation."
What This Means Going Forward
Binding precedent binds tribunals. A tribunal cannot reopen an order that was based on a Supreme Court decision merely because it now believes the higher court missed a point.
Review is not a second appeal. An erroneous order cannot be corrected in review, and an error needing long reasoning is not an error apparent on the face of the record.
Delay in disposing of reviews has a cost. The Court viewed a review left pending for five years and decided against a settled order as an abuse of process and imposed exemplary costs.
Interveners can pay too. A public sector undertaking that joined to defend an order in breach of Article 141 was held to be ill-advised and was made to pay costs.
The Damodar Valley Corporation Act survives where consistent. Section 40 funds and Regulation 43 continue to shape the tariff of the Damodar Valley Corporation under the fourth proviso to Section 14.
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Frequently Asked Questions
Why did the Supreme Court say the Appellate Tribunal had gone haywire?
The Tribunal allowed a review of its own 2019 order after five years, on a point the Supreme Court had already settled in Bhaskar Shrachi Alloys, which the Tribunal had itself relied on originally. The Court called this a breach of judicial discipline and of Article 141.
Can a tribunal review its order on the basis of a different view of the law?
No. Following Kamal Sengupta, the Court reiterated that an order cannot be corrected merely because it is erroneous in law or because a different view was possible, and that a tribunal exercising review cannot sit in appeal over its own decision.
Is the Sinking Fund a double benefit along with depreciation?
The Court held that it is not. Section 40 of the Damodar Valley Corporation Act and Regulation 43 of the 2009 Tariff Regulations permit both depreciation and the funds established under that section to be treated as expenditure recoverable through tariff.
What costs did the Supreme Court impose?
Costs of Rs. 2,00,000 on Maithan Alloys Limited, the first respondent, and Rs. 1,50,000 on the Steel Authority of India Limited, payable to the Damodar Valley Corporation within one month, failing which interest at 18 percent per annum applies.
What happens to the tariff for 2009 to 2014?
The Tribunal's order of 17 May 2019 is restored, which upholds the Commission's tariff determination including the Sinking Fund as an item of expenditure recoverable through tariff.
Keywords
Damodar Valley Corporation tariff, Sinking Fund tariff, Article 141 binding precedent, review petition limits, error apparent on the face of the record, Appellate Tribunal for Electricity review, judicial discipline, Bhaskar Shrachi Alloys, Kamal Sengupta, Section 40 DVC Act, fourth proviso Section 14 Electricity Act, Regulation 43 Tariff Regulations 2009, exemplary costs, Maithan Alloys, 2026 INSC 1178, Justice J.B. Pardiwala, Justice K. Vinod Chandran.
Case Title: Damodar Valley Corporation v. Maithan Alloys Limited & Ors.
Case No.: Civil Appeal No. 11106 of 2024
Citation: 2026 INSC 1178
Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran
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