Supreme Court Sets Aside APTEL Review, Imposes Rs 3.5 Lakh Costs for Defying Precedent

The Supreme Court on October 30, 2026 set aside an Appellate Tribunal for Electricity review order that had reopened recovery of Damodar Valley Corporation's sinking fund contributions through tariff, holding that the review disregarded a binding precedent of the apex court and breached judicial discipline. A Division Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran allowed Civil Appeal No. 11106 of 2024 in Damodar Valley Corporation v. Maithan Alloys Limited & Ors., restored the tribunal's 2019 decision and directed costs against the contesting consumers.

With this ruling, the tariff dispute ends at the Supreme Court level. The tribunal had decided the sinking fund question in 2019 and then revisited it in review. That second order could not stand, the Court said. It ordered Maithan Alloys Limited to pay Rs 2 lakh and Steel Authority of India Limited to pay Rs 1.5 lakh to Damodar Valley Corporation within one month, with interest at 18 per cent per annum on default.

For utilities and large industrial consumers, the message is direct. The Court treated the review as an attempt to reopen a settled tariff issue contrary to law laid down by the Supreme Court. It restored the earlier outcome in full and made the unsuccessful parties pay for prolonging recovery.

2019 order restored, review set aside

At issue was whether Damodar Valley Corporation, a power generator and supplier, could recover contributions made to a sinking fund through electricity tariff charged to its consumers. The Appellate Tribunal for Electricity had ruled on that question in 2019. That order gave finality at the tribunal stage on the point between the parties.

Before the apex court was not the original 2019 order but a later review order by which the tribunal reopened the same question. In review, the tribunal took a different view and allowed reconsideration of the recovery. Damodar Valley Corporation challenged that review in Civil Appeal No. 11106 of 2024. Maithan Alloys Limited and others, including Steel Authority of India Limited, resisted the appeal as consumers of power.

The Bench asked whether the tribunal was entitled in review to take a course contrary to the position already settled by the Supreme Court. It held it was not. Tribunals, like courts subordinate to the Supreme Court, are bound by its decisions and cannot sit in review over them or carve out exceptions on the same point, the Bench said.

It set aside the review order and restored the 2019 order of the tribunal. No fresh adjudication on the sinking fund recovery was left pending before the tribunal on that count. The parties were left to work out tariff consequences in line with the restored order.

The judgment was pronounced on October 30, 2026. It was delivered by a two-judge Bench comprising Justice Pardiwala and Justice Chandran. The operative directions dealt with both the merits and the costs, and fixed a one-month period for payment.

Review defied binding precedent

Under India's court system, a decision of the Supreme Court binds all courts and tribunals. A tribunal cannot disregard that law because it takes a different view of the tariff question or because a party has raised fresh arguments in review. Review is meant to correct an error apparent on the face of the record. It is not a rehearing, and it is not a route around apex court law.

The Bench said the tribunal's review had done what review does not permit. By reopening recovery of the sinking fund contributions after the legal position had been settled by the Supreme Court, the tribunal had acted against the hierarchy it is part of. The Court described that course as a violation of judicial discipline. Disregard of a binding decision, it said, strikes at the consistency of tariff orders, which depend heavily on settled legal premises applied across cases and years.

Lawyers who practise before regulatory tribunals often explain the difference between binding and persuasive precedent when advising clients on whether to seek review or appeal. A Supreme Court decision on a point of law is not merely guidance for the tribunal. It controls the outcome on that point until it is changed by the Supreme Court itself or by competent legislation. Decisions of other forums may be cited for their reasoning, but they cannot be used to avoid what the apex court has laid down.

That distinction mattered here. The Supreme Court did not treat the tribunal as having a choice between competing views. It treated the tribunal as bound. Once the apex court had spoken, the tribunal had to follow it, both in the original decision and even more so in review. A review order that departs from that position is, in the Court's view, without legal basis.

The judgment also turned on the binding force of precedent under the Constitution, which makes Supreme Court law binding on all courts within the territory of India. Tribunals exercising judicial functions fall within that discipline. They decide rights, record reasons and make orders that affect tariffs paid by industry and ultimately by end users. Consistency requires that they apply the same legal rule to the same question, rather than reopen it for one set of parties.

Disagreement with a precedent, however strongly felt, must be expressed through the proper channel, the Court made clear. A tribunal that considers a Supreme Court decision to be incorrect cannot overrule it. It must follow it and leave it to the parties to seek reconsideration before the Supreme Court itself. To do otherwise invites conflicting tariff orders and repeated litigation over the same recovery.

Rs 3.5 lakh costs in one month

Costs formed a separate and firm part of the order. The Court imposed Rs 2 lakh on Maithan Alloys Limited and Rs 1.5 lakh on Steel Authority of India Limited, both payable to Damodar Valley Corporation. The total of Rs 3.5 lakh is compensatory in character and follows the finding that the review should not have been pursued to reopen a concluded point.

The Bench directed payment within one month from the date of the order. Failure to pay within that period will attract interest at 18 per cent per annum until payment. The rate is high by usual standards for costs and signals the Court's disapproval of the conduct that prolonged the dispute. Interest will run in favour of Damodar Valley Corporation, the recipient of the costs.

In tariff appeals, costs are often modest and many orders make no costs order at all. An order of Rs 3.5 lakh with penal interest therefore stands out. It reflects the Court's view that parties who invite a tribunal to disregard settled law must bear the financial consequence. The direction also compensates the generator for litigation over recovery that, in the Court's assessment, should have ended earlier.

For Damodar Valley Corporation, the practical effect is twofold. It regains the benefit of the 2019 tribunal order on sinking fund recovery and it receives costs for the additional round. For Maithan Alloys and Steel Authority of India, the order means payment of costs within the stipulated time and adjustment of tariff claims in line with the restored decision. The one-month clock started with the October 30 order.

Power tariff cases often involve large sums spread over years of supply, and even a narrow question such as treatment of a fund contribution can affect billing across consumer categories. That is why finality matters to utilities and to large industrial consumers alike. When a tribunal reopens such a question in review against apex court law, it creates uncertainty for past bills and for future tariff filings.

The Supreme Court's answer was to restore finality. By setting aside the review and restoring the 2019 order, it removed the conflicting tribunal view from the field. There is now a single tribunal outcome on the point, consistent with Supreme Court law. Billing, accounts and any pending tariff true-up linked to that issue will have to follow that outcome.

Counsel appearing before the Appellate Tribunal for Electricity will have to frame review petitions within the narrow scope of review. The order indicates that review cannot ask the tribunal to depart from Supreme Court law. Arguments that in substance seek reconsideration of a settled legal position belong in appeal before the Supreme Court, not in review before the tribunal. Parties that press such arguments in the wrong forum face dismissal and the risk of costs.

Maithan Alloys must pay Rs 2 lakh and Steel Authority of India must pay Rs 1.5 lakh to Damodar Valley Corporation within one month from October 30, 2026, failing which 18 per cent annual interest will apply till payment.