The Supreme Court held that if a party does not file an appeal or cross-appeal, it is deemed not aggrieved by the operative part of the order. Such a party cannot later challenge that part of the order in an appeal filed by another person.
The Supreme Court has clearly explained that if a party does not file an appeal or a cross-appeal against an order, it means that the party is not aggrieved by that part of the order. Such a party cannot later question the correctness of that part when another person files an appeal on a different issue.
The Court made this important observation while hearing a civil appeal filed under Section 125 of the Electricity Act, 2003.
The case arose from an order passed by the Appellate Tribunal for Electricity (APTEL), which had denied RattanIndia Power Limited (RPL) carrying cost on a compounding interest basis.
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The two-judge Bench of Justice Manoj Misra and Justice Joymalya Bagchi examined the scope of appeals under Section 125 and the general principles that apply when one party chooses not to challenge an order.
While explaining the legal position, the Supreme Court observed,
“We are conscious that provisions of CPC are not strictly applicable to a statutory appeal under Section 125 of the 2003 Act, but general principles thereof can be applied, particularly, when powers under Section 125 of the 2003 Act are invocable by a person aggrieved through an appeal, filed within a specified time, on any one or more of the grounds specified in Section 100 CPC. … Besides above, when a person fails to file an appeal or a cross-appeal, it can be taken that he is not aggrieved by the operative part of the order against which, or some part of which, the appeal is filed by some other person.”
The Bench also emphasised that although the Supreme Court has very wide constitutional powers under Articles 136 and 142 of the Constitution of India, these powers are not meant to be exercised routinely. The Court stated that statutory limitations cannot dilute constitutional powers, but the exercise of such powers must be backed by compelling circumstances.
It clarified that even though the Court can act suo motu or do complete justice, especially under Articles 136 and 142, such intervention should be rare, particularly in commercial matters governed by a specific statutory framework.
In the present case, Advocate-on-Record Syed Jafar Alam appeared for the appellant RattanIndia Power Limited, while Senior Advocate B.P. Patil represented the respondents.
RattanIndia Power Limited was supplying electricity to Maharashtra State Electricity Distribution Company Limited (MSEDCL) under two long-term Power Purchase Agreements for supply of 450 MW and 750 MW of power.
Due to various “Change in Law” events that affected the project, RPL approached the Maharashtra Electricity Regulatory Commission (MERC) under Section 86 of the Electricity Act, 2003. RPL sought compensation for these Change in Law events from the date it started supplying power and also claimed carrying cost on the compensation amount.
MERC partly allowed RPL’s claims and granted certain Change in Law compensation. However, RPL was dissatisfied and filed an appeal before APTEL.
The appeal was allowed, and the matter was remanded back to MERC with directions to compute the amount payable so as to restore RPL to the same economic position it would have been in if the Change in Law events had not occurred.
After the remand, RPL again approached MERC, which modified its earlier order and awarded Rs. 69.38 crore as Change in Law compensation, including carrying cost. MERC also directed RPL to raise a supplementary bill and instructed MSEDCL to pay the amount as per the PPAs. For a disputed amount of Rs. 1.56 crore, MERC directed both parties to reconcile the figures.
RPL once again appealed before APTEL. This time, APTEL partly allowed the appeal and remanded the matter to MERC to compute and direct payment of carrying cost at Late Payment Surcharge (LPS) rates. However, APTEL denied carrying cost on a compounding interest basis.
Aggrieved by this denial, RPL approached the Supreme Court. Notably, MSEDCL did not file any appeal or cross-appeal against the APTEL order.
Taking note of this fact, the Supreme Court observed,
“What is important is that, unlike APTEL, which can exercise suo motu powers under sub section (6) of Section 111 of the 2003 Act, the powers of this Court, under Section 125 of the 2003 Act, are invocable through an appeal filed by a person aggrieved. In consequence, if the aggrieved person does not file an appeal, or a cross-appeal/ cross-objection, under Section 125, impugning the order, or any portion of it, passed by APTEL, it cannot question the correctness of the same in an appeal preferred by another person questioning that much portion of the order with which it is aggrieved.”
The Court further explained that the earlier remand order did not finally decide the issue of granting LPS benefit, even though it referred to certain judgments suggesting that compensation for increased carrying cost should include LPS.
The Bench said,
“… though we do not find fault with the impugned order of APTEL that the remand order indicated grant of LPS benefit, we do not agree with the view of APTEL that MERC or APTEL were bound by those observations and could not have taken a decision qua LPS by taking notice of the law relating to grant of LPS benefit. Reason is simple, the issue regarding grant of LPS benefit on Carrying Cost was not decided. Rather, there was a remand whereunder MERC was required to decide the issue bearing in mind the observations in the judgment/order”.
The Supreme Court also clarified the legal position on remand matters and stated that when a case is remanded, the dispute remains alive unless the court clearly says otherwise.
It observed,
“Rather, it is duty of a court, whether it is trying original proceedings or hearing an appeal, to take notice of the change in law affecting pending actions and to give effect to the same. No doubt, judicial discipline requires that directions of a higher court must be followed by the court subordinate to it. However, there may be a situation where following a direction may amount to violating the binding law laid down by a superior court or the Apex Court. In such a situation, where the lis is alive, the subordinate court or adjudicating body will have to apply and follow the law which holds the field on the day it decides the matter”.
The Court further explained that merely because a remand order refers to certain judgments, it does not mean that the authority deciding the case later is barred from considering subsequent legal developments.
It stated,
“We must not be understood as saying that such a direction has to be ignored. Rather, such a direction must be given due consideration unless the law on the subject, which is binding on the court or adjudicating body, requires otherwise”.
While dealing with MSEDCL’s conduct, the Supreme Court made it clear that since MSEDCL did not challenge the APTEL order, it lost its right to question certain findings.
The Bench observed,
“In such circumstances, we are of the view that by not preferring an appeal or cross-appeal/objection against the order of APTEL, MSEDCL has given up its right to challenge the award of compensation to the appellant of Carrying Cost with interest at LPS rate”.
In its concluding remarks, the Supreme Court reiterated that constitutional powers under Articles 136 and 142 cannot be curtailed by statutory provisions, but such powers must be exercised with restraint, especially in commercial disputes governed by statutory schemes.
The Court said,
“We do not find any such circumstances obtaining as to warrant exercise of those powers. … The argument on behalf of the first respondent that appellant had claimed carrying cost as per MYT Regulations before MERC and, therefore, cannot raise a claim at LPS rate has no legs to stand as no appeal has been preferred by the first respondent against the impugned order which allowed carrying cost with interest at LPS rate”.
Ultimately, the Supreme Court held that APTEL was wrong in denying compounding of interest solely on the ground that the remand order did not specifically provide for it. Since this issue was never finally decided, it required fresh consideration.
Accordingly, the Court allowed RattanIndia Power Limited’s appeal and remanded the matter back to APTEL to decide the issue of compounding of interest afresh.
Case Title:
RattanIndia Power Limited v. Maharashtra State Electricity Distribution Company Limited and Another (Neutral Citation: 2025 INSC 1502).
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