APTEL Dismisses Chemplast Sanmar and Allied Appellants' Bids to Condone Decade-Long Delay in Challenging Tamil Nadu Tariff Orders on Deemed Demand Charges

APTEL refuses to condone delays of up to 5,100 days in appeals against Tamil Nadu tariff orders, finding appellants lacked good faith and diligence under Section 14 of the Limitation Act.

The Appellate Tribunal for Electricity, in a batch of seven appeals decided on 27 May 2026, dismissed all applications seeking condonation of delay filed by Chemplast Sanmar Limited and its group companies, the Tamil Nadu Spinning Mills Association, the Madras Steel Re-Rollers Association and allied industrial consumers, and India Cements Limited. The appellants had challenged Tamil Nadu Electricity Regulatory Commission tariff orders from 2012, 2013 and 2017 that, they argued, had improperly withdrawn the benefit of Deemed Demand Charges available to High Tension Open Access Captive Power Generators and Consumers. The delays ranged from approximately 3,094 days to 5,100 days. A bench of Officiating Chairperson Ms. Seema Gupta and Judicial Member Mr. Virender Bhat held that the appellants had not acted in good faith or with due diligence and were therefore not entitled to the benefit of Section 14 of the Limitation Act, 1963. With the condonation applications dismissed, all seven appeals were found to be barred by limitation and dismissed.

The Deemed Demand Charges Dispute

The concept of Deemed Demand Charges was introduced by the Tamil Nadu Electricity Regulatory Commission through its Tariff Regulations of 2005 and was given effect in Tariff Order No. 2 of 2006 dated 15 May 2006. That order extended the benefit of Deemed Demand Charges to High Tension Captive Consumers of non-renewable energy using open access facilities.

The Commission subsequently passed the 2012 Retail Tariff Order, the 2012 Transmission Tariff Order, and the 2013 Retail Tariff Order. None of these orders contained an express provision continuing Deemed Demand Charges. The 2012 orders introduced demand charges payable on the basis of Billing Demand, that is, the demand recorded in the particular month. The 2013 Retail Tariff Order introduced the concept of “Billable Demand” in place of Deemed Demand Charges for High Tension Supply Consumers.

On 29 July 2013, the Chief Financial Controller/Revenue of TANGEDCO issued a circular to all Superintending Engineers of Distribution Circles. The circular, after extracting paragraphs from the 2013 Tariff Order, stated that the concept of Deemed Demand had not been envisaged in the 2013 Tariff Order and that demand charges for open access consumers were to be collected without applying the Deemed Demand concept.

The appellants took the position that the 2006 Tariff Order benefit had never been expressly withdrawn and that any withdrawal required the procedure applicable to a change in tariff policy, not an administrative circular. They challenged the circular before the Madras High Court by way of writ petitions seeking its quashing and, in some cases, refund of demand charges paid under bills raised pursuant to the circular.

Litigation History Before the High Court and Supreme Court

A Single Bench of the Madras High Court allowed the writ petitions by a common order dated 14 September 2018, quashing the circular dated 29 July 2013.

The Tamil Nadu Power Distribution Corporation Limited challenged that order before a Division Bench by way of Writ Appeal No. 947 of 2019 and connected matters. The Division Bench allowed the writ appeals on 12 December 2025, setting aside the Single Bench order and dismissing the writ petitions.

The Division Bench held that Tariff Order No. 2 of 2006 had been explicitly superseded by the 2012 Tariff Order effective from 1 April 2012, and that the 2013 Tariff Order had rationalised tariff for High Tension Supply Consumers by introducing Billable Charges in place of Deemed Demand Charges. It further held that the circular of 29 July 2013 was merely an instruction from the Finance Controller to regional superintendents to follow the 2013 Tariff Order, and that writ petitions challenging only the consequential circular without challenging the underlying tariff order before the appellate authority were not maintainable.

The appellants then filed Special Leave Petitions before the Supreme Court. By order dated 9 March 2026, the Supreme Court dismissed the petitions as withdrawn, granting liberty to the appellants to challenge the tariff orders before the appropriate forum by filing appeals, and keeping open all contentions including those on maintainability.

The appellants thereupon filed the seven appeals before APTEL, accompanied by applications for condonation of delay.

Appellants' Case for Condonation

Senior counsel for the appellants argued that the case was squarely covered by Section 14(1) of the Limitation Act. The submission was that the appellants had no occasion to challenge the tariff orders until the Division Bench judgment of 12 December 2025, because prior to that judgment there was no pleading, no judicial order, and no quasi-judicial order identifying an implied withdrawal of Deemed Demand Charges through the 2013 Retail Tariff Order. The Division Bench judgment was described as the first and only instrument that identified such implied withdrawal, and the cause of action to challenge the tariff orders was said to have crystallised only on that date.

It was further argued that the writ petitions before the High Court had been prosecuted in good faith and with due diligence, and that the period up to 12 December 2025 ought to be excluded. Counsel also submitted that the Supreme Court's grant of liberty to approach APTEL, made with full awareness of the tariff orders passed between 2012 and 2017, could not have been directed if the tariff orders were unchallengeable. Rejecting the appeals on limitation, it was argued, would render the Supreme Court's liberty nugatory.

Respondent's Opposition

Senior counsel for the Tamil Nadu Power Distribution Corporation Limited argued that a bare reading of the 2012 and 2013 tariff orders showed that stakeholder comments seeking continuation of Deemed Demand had been noted but deliberately not accepted, making the discontinuation clear on the face of the orders. The 2017 Tariff Order had gone further and specifically stated that Deemed Demand Charges had been withdrawn by the 2012 Transmission Tariff Order itself.

On Section 14, the respondent argued that the matter in issue in the writ petitions, which challenged the circular, was not identical to the matter in issue in the appeals, which challenged the tariff orders. Under Section 14(2), the relief sought in the prior proceedings must be the same as the relief sought in the subsequent proceedings. It was also argued that Section 14 requires the prior court to have been unable to entertain the proceedings due to defect of jurisdiction or a cause of like nature, whereas both the Single Bench and the Division Bench had decided the writ petitions on merits.

On the Supreme Court's liberty, the respondent submitted that objections on limitation are part of objections to maintainability, and the Supreme Court had expressly kept all such contentions open for APTEL to decide.

APTEL's Analysis on Section 14

The Tribunal set out the conditions required to claim the benefit of Section 14 of the Limitation Act, drawing on the Supreme Court's decisions in Union of India v. West Coast Paper Mills Ltd. (2004) 3 SCC 458 and Consolidated Engg. Enterprises v. Principal Secretary, Irrigation Department (2008) 7 SCC 169. Those conditions are: both prior and subsequent proceedings must be civil proceedings by the same party; the prior proceedings must have been prosecuted with due diligence and in good faith; the failure of the prior proceedings must have been due to defect of jurisdiction or other cause of like nature; the two proceedings must relate to the same matter in issue; and both must be proceedings in a court.

The Tribunal found that the appellants failed to satisfy these conditions. In the 2012 tariff orders, the section on Grid Availability Charges under which Deemed Demand Charges had been introduced in 2006 was absent entirely. Stakeholder comments seeking continuation of Deemed Demand were noted but not accepted. The 2013 Retail Tariff Order introduced Billable Demand in its place. By 2017, the tariff order expressly stated that Deemed Demand Charges had been withdrawn by the 2012 Transmission Tariff Order.

The Tribunal also referred to the Supreme Court's decision in Arifa and Others v. Abhiman Apartment Co Operative Housing Society Limited and Others (2025) 10 SCC 700, which held that liberty granted to file fresh proceedings does not revive a cause of action or save limitation. On that basis, APTEL held that the liberty granted by the Supreme Court on 9 March 2026 did not entitle the appellants to bypass the bar of limitation, and that the Supreme Court's reservation of all maintainability contentions for APTEL implicitly required APTEL to consider limitation objections as well.

Finding on Good Faith and Diligence

The Tribunal was pointed in its assessment of the appellants' conduct. In 2013, instead of challenging the tariff orders before APTEL, the appellants chose to challenge only the consequential circular before the High Court. After the 2017 Tariff Order expressly clarified that Deemed Demand Charges had been withdrawn by the 2012 Tariff Order, the appellants still did not approach APTEL and continued with the writ petitions. The Tribunal described this as exhibiting “total lack of diligence in pursuing the reliefs sought.”

The delays involved were substantial. India Cements and Chemplast Sanmar faced delays of 5,054 and 5,055 days respectively on the 2012 Retail Tariff Order. The Madras Steel Re-Rollers Association faced a delay of 5,100 days on the same order. Even on the 2017 Tariff Order, delays ranged from 3,094 to 3,110 days across the appellants.

The Tribunal concluded that the situation demonstrated an absence of good faith and diligence of great magnitude, and that the law should not come to the rescue of such litigants.

Outcome

All seven condonation applications — IA Nos. 448, 472, 477, 482, 487, 542 and 438 of 2026 — were dismissed. As a consequence, DFR Nos. 112, 114, 121, 122, 123, 124 and 139 of 2026 were found to be barred by limitation and dismissed. All other applications filed along with the appeals were disposed of accordingly. The order was pronounced in open court on 27 May 2026.