SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 1/17 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. S.B. CIVIL WRIT PETITION NO.2390/2006 M/s Binani Cement Ltd. versus The State of Rajasthan and ors. PRESENT HON'BLE Dr.JUSTICE VINEET KOTHARI Mr.Sudhir Gupta } Mr.Dinesh Mehta, }for the petitioner. Mr.R.K.Singhal, for respondents REPORTABLE DATE OF JUDGMENT : 28th April, 2008. JUDGMENT 1. This writ petition has been filed by the petitioner – Company aggrieved against the impugned communication of respondent – Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. (RRVPNL for short) vide Annex.11 dated 21.12.2000, Annex.20 dated 11.3.2004 and Annex.23 dated 18.7.2005 whereby the respondents withheld payment of 30% of the amount due to be paid to the petitioner – SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 2/17 company on account of power supply by Captive Power Plant of the petitioner – company to the respondent. 2. The petitioner company has set-up cement manufacturing plant in the State of Rajasthan and it offered vide its letter dtd.7.7.1999 to sell surplus power to RSEB on the understanding that whatever rates are finalized by the RSEB for such supply of powers, would be given to the company also at the same rate. By the letter dtd.15.7.1999 of Director (Commercial) of RSEB addressed to the petitioner – Company, the respondent – RSEB requested the petitioner company to supply power to RSEB at system frequency not exceeding 50.0 hz., initially for a period of seven days to watch the satisfactory operation of arrangement. The said letter also stipulated that an electronic export meter to record supply of power from Company's generating station to RSEB Grid Sub-station has been installed at the Gird Sub- station and joint meter reading will be recorded in the presence of Executive Engineer (O & M), Sirohi/ Assistant Engineer (O & M/Meter) and Company's representative before start of supply of power to RSEB. A joint reading shall be recorded after a period of seven days. The rates of supply were to be finalized later with other SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 3/17 terms and conditions. Accordingly, the petitioner started supplying power to the respondent RSEB from 10th July, 1999 even few days prior to this letter which continued throughout, but the dispute in the present case belongs to non-payment of 30% of such charges as were finalized later by the respondent RSEB between the period from 21.12.2000 to June, 2001. The petitioner has stated in the writ petition that complete payment for the period from 10th July, 1999 upto 20.12.2000 has been made by the respondents to the petitoiner – Company and there is no dispute for this period. 4. Under the order issued by the Energy Department of the Government of Rajasthan on 4.10.2000 which is the basic contract between the parties, Annex.4 on record , the rate under the Captive Power Plant Policy of the State Government dated 15.7.1999 was finalized at 60% of the prevalent HT large industrial tariff i.e. at 243 paisa per unit. The said rate was applicable upto 31st March, 2001 and thereafter an increase of 5% in the above rate was to be allowed subject to ceiling of 60% of HT Tariff. The petitioner thus, continued to supply power to the respondents and was paid provisionally certain sums against said supply. SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 4/17 5. For the first time, the Superintending Engineer (Commercial), respondent No.4 in the writ petition Mr. S.C. Datta wrote to the petitioner – Company vide letter dtd.1.12.2000 Annex.8 that supply of surplus power from the Company to the RSEB System was agreed to be taken at frequency not exceeding 50 Hz., but the staement of units exported to the Company does not indicate energy suplied to RSEB Grid upto 50 Hz. and above 50 Hz. separately without which it is not possible to ascertain the position of billing. It is also not known whether the Company has installed necessary frequency based meter to ensure the export of energy to the RSEB Grid as per the above stipulation. The said authority also conveyed to the petitioner company that necessary frequency based meter system is to be installed by the Company at the earliest if not already done and energy supplied ensured only in such hours when the frequency does not exceed 50 Hz. The said communication dated 1.12.2000 however does not disclose any reason for asking the petitioner – Company to install a new and different frequency based meter whereas admittedly the SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 5/17 letter issued by the Director (Commercial) on 15.7.1999 Annex.3 clearly stipulated that an electronic export meter to record supply of power from Gird Station of the Company to the RSEB Grid has already been installed at the Gird Sub-Station by the RSEB. After the said communication dated 1.12.2000, the said authority Mr. S.C. Datta, Superintending Engineer (Commercial), RRVPNL, Heerapura,Jaipur appears to have constantly insisted upon the petitioner - Company to install such meter and in the absence of same, balance payment of 30% of the amount due to be paid to the petitioner – Company as per the rates notified vide order dtd.4.10.2000 of the Energy Department of the Government of Rajasthan was not paid to the petitioner – Company for the aforesaid period. The petitioner - Company in response to the said communication Annex.8 dated 1.12.2000 informed the Chairman cum Managing Director of RRVPNL vide its letter dtd.12.12.2000 Annex.9 in para 6 of the said letter that:- “Our power plant is fully synchronized with the RSEB Grid as per the design approved and authority conveyed by RSEB. Thus, we are the follower of the RSEB and cannot increase and SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 6/17 decrease the frequency as we are in parallel with the Grid being small unit and hence have to adopt the frequency of RSEB Grid which has been fluctuating between 47.8 HZ to 50 HZ. 6. Similar letter was also given vide Annex.10 dtd.12.12.2000 to the respondent No.4, Superintending Engineer (Commercial). The said Authority respondent No.4 however, vide his letter dtd.21.12.2000 informed the petitioner – company to furnish proof of supplies made upto frequency 50 Hz only as mentioned in its letter and further stated that the contention of the Company of permissible variation of 3% above declared frequency 50 Hz allowed as per the Indian Electricity Rules, 1956 is not relevant as supplies in high frequency situation have substantial financial implication for RVPN and pending the settlement of actual amount of energy supplied upto 50 Hz., CMD, Jodhpur Discom is being advised to adjust 70% of the pending amount towards the energy supplied to RVPN Grid by the petitioner's Captive Power Plant. SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 7/17 7. The Company in response to the said letter informed the respondents that the Company has already loaded a software in its thermal power plant DSC and they are getting 24 hours trends of frequency, power exported (MW) and power imported (MW) from RSEB. Daily print outs of these trends can also taken and therefore, the Company requested the respondent No.4 to get this system inspected as per his convenience. Still, it appears that the said respondent No.4 Mr. S.C. Datta insisted upon the petitioner – Company to install frequency based energy meters i.e. ABT meters, the required specification of which were supplied by him along with his letter dtd.6.1.2001, Annex.13. The petitioner – Company informed the said authority vide its letter dtd.12.1.2001 that such meters have not yet been developed and are in the process of development in India and therefore, there was no question of getting the same installed and the system which was already installed by the petitioner – Company was giving satisfactory information and was recording frequency of supply and one such meter had already been installed at Sub-station of RSEB Grid vide Annex.3 letter dtd.15.7.1999 and the petitioner – Company requested that said SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 8/17 equipment insalled by the petitioner -company may be got inspected for verifying its efficiency. 8. The respondent No.4 again negatived the said request of the petitioner – company that the software loaded in its Thermal Plant does not serve the desired purpose and again insisted upon the petitioner – Company to install frequency based meter vide letter dtd.22.1.2001 Annex.15. Vide letter dtd.24.2.2001 Annex.18 the said respondent No.4 again advised the petitioner company that further supply to RVPN Grid from its Captive Power Plant be made only after making suitable arrangements for recording of frequency along with energy supply and for the interim period, if the Company wishes to supply inadvertent energy, the payment for the same shall be made @70% of the applicable rates and thus, the petitioner – Company was requested to confirm the acceptance of 70% of the applicable rates till such time the frequency based energy meters are installed by the Company. 9. The learned counsel for the petitioner also pointed out that by letter dtd.17.7.2001, Annex.19 of the Dy. Chief Engineer (Protection) SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 9/17 of RRVPNL, it was clear that even the facility for testing of frequency based energy meter is not available with RRVPNL and one such meter of one company also DSCL, Kota was got tested at M/s Yadav Metrology Laboratory, Udaipur in presence of the Executive Engineer (Protection), Kota and the representative of M/s DSCL,Kota. The said authority also said that the case of M/s Binani Cement Limited i.e. present petitioner is similar to the above case as similar testing is to be carried out at Yadav Metrology Laboratory, Udaipur. It is in these circumstances that for non-payment of 30% of the amount due to be paid to the petitioner for a portion of the period from 21.12.2000 to June, 2001 that the petitioner preferred this writ petition against the alleged illegal action of the respondents of insisting upon installation of frequency based meter by the petitioner – Company and also having discarded the equipment installed by the Company with software which was generating daily print outs of frequency of power supply at 50 Hz. to RSEB Sub-station Grid. 10. The learned counsel for the petitioner taking the Court through all these documents submitted that it was highly arbitrary and illegal on the part of the respondent – authorities, particularly respondent SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 10/17 No.4 who illegally insisted upon installation of frequency based energy meter though the said meter was also installed at RSEB Sub- station Grid vide Annex.3 letter dtd.15.7.1999 and secondly though the petitioner continued to supply the power from its Captive Power Plan to the respondents at the said frequency of 50 Hz and had installed equipment with software which monitored the said frequency, insistence of the respondent No.4 on installation of new equipment and meter at Captive Power Plant of the petitioner – Company was without any basis. He further submitted that the said authority could not impose such condition beyond the scope of original order issued by the Energy Department of Government of Rajasthan on 4.10.2000 in which no such condition was stipulated. He further alleged that since such electronic meter was already installed at the premises of RSEB Sub-Station Grid, where such power was received, there was no occasion for the petitioner – company to install such frequency based energy meter. He further submitted that the petitioner not only supplied excess power generated at its Captive Power Plant to the the respondent RRVPNL, but on certain occasion it also purchased power from the respondent – RRVPNL. He further submitted that the documents sought to be SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 11/17 relied upon by the respondents for withholding 30% of the payment due to the petitioner – Company under the garb of Annex.R2/1 order dtd.22.1.2001 and Annex.R2/2 order dtd.5.12.2001 modifying the earlier order dtd.26.1.2001 were never communicated to the petitioner company nor any mention of them was made in the series of letters addressed by the respondent No.4 to the petitioner – company. He however, submitted that the said orders neither can go against the petitioner – company nor they can stand in the way of the petitioner – company from being paid at the rate of 243 paisa per unit finalized vide order dtd.4.10.2000, Annex.4 because the petitioner was not only complying with the conditions of supply of power at 50 Hz. and the respondents have failed to point out any subsequent occasion when the power supply was beyond the said frequency of 50 Hz. He also submitted that 3% variation was permissible under the Rules but surprisingly the respondent No.4 in his communication Annex.11 dated 21.12.2000 said that such Rules were not relevant to the matter. He therefore, prayed for quashing of impugned communications of respondent No.4 in this regard and for issuing appropriate directions to the respondent – authorities, for releasing the illegally withheld SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 12/17 payment due to be paid to the petitioner – company as per the contract. 11. Mr. R.K. Singhal, learned counsel appearing for the respondents on the side opposite urged that due payments were made by the respondent RRVPNL to the petitioner – company and since on various occasions, supply was made by the petitioner – company at the frequency different from 50 Hz, the payment to the extent of 30% was withheld in terms of orders issued by the Department of Energy on 22.1.2001and 5.12.2001, Annex.R2/1 and R2/2 respectively. He further tried to justify the stand of the respondent No.4 for insisting upon the petitioner – company to install a new frequency based meter. Referring to para 8 and para 9 of the reply, the learned counsel for the respondents urged that initial arrangement was only for a period of seven days and thereafter the petitioner was clearly informed vide letter dtd.1.12.2000 to install a new frequency based meter as “at times” supply of power was made at the frequency above 50 Hz. However, the learned counsel for the respondents upon specific query from the Court failed to point out any specific occasion when such supply was made over 50 Hz and what was the basis of SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 13/17 making such allegation in the reply. He also could not point out any cogent reason for insisting upon the petitioner – company for installing new frequency based meter in view of such meter already installed at RSEB Grid Sub-station as clearly stated in the initial letter Annex.3 dated 15.7.1999. When pointed out that one particular authority Mr. S.C. Datta, Superintending Engineer (Commercial) appears to have initiated the said tirade of communications against the petitioner – Company for installation of new frequency based meter and having insisted upon making only 70% of the payment due to the petitioner – company without any change in the terms of the contract by the State Government, the learned counsel for the respondents could only state that there was no allegation of malafides agianst the said respondent No.4. 12. Having heard the learned counsels at length and having perused the record carefully, this Court is of the opinion that there appears to be no cogent reason available with the respondents to withhold the payment to the extent of 30% of the amount due to be paid to the petitioner – company as per Captive Power Plant Policy of the State Government notified vide Annex.4 dated 4.10.2000. The very initial SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 14/17 acceptance of offer of the petitioner – company by Annex.3 was though initially for a period of 7 days vide Annex.3 dtd.15.7.1999 continued throughout and the petitioner company continued to supply the power from its Captive Power Plant under the contract. The said communication dtd.15.7.1999 clearly stipulated that an Electronic Export Meter to record supply of electricity from company's generating Grid to RSEB Grid has been installed at the RSEB Grid Sub-station. There is nothing on the record to indicate as to what happened to that Electronic Export Meter at RSEB Grid Sub-Station and why it was insisted upon the petitioner – company to install new frequency based meter. Such insistence was made apparently only by one authority, namely, the respondent No.4. The documents on record show that said meters were not even developed in the Country by that time and even when they were made available somewhere in the year 2001, the respondents even did not have adequate facilities for inspection of the same and they had to approach a private agency, namely, Yadav Metrology Laboratory, Udaipur for inspection of such meters. This would be evident from letter Annex.19 dated 17.7.2001 written by the Dy. Chief Engineer (Protection) in the case of meter purchased by one M/s DSCL of Kota. SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 15/17 13. The fact that the respondents are continuing to purchase the power from the Captive Power Plant of the petitioner – Company even thereafter and full payments were made by the respondents for the period upto 20.12.2000 and the dispute in the present matter pertains only for a limited period of approximately six months i.e. from 21.12.2000 till June, 2001 merely on the ground that the petitioner failed to install new frequency based meter is found to be not justified by this Court. No such condition of installing frequency based meter was contained in the contract between the parties nor the original order dtd.4.10.2000 contains any such condition. The respondents have failed to establish any specific occasion when the power was supplied by the petitioner – Company at the frequency exceeding 50 Hz. Mere bald allegation in this regard that “at times” it so exceeded is of no avail to the respondents. If this was put as a condition in the contract, the respondents ought to have informed the petitioner – company of the same in advance and entered into a mutual contract in this regard. Such a condition cannot be put ex post facto by one of the authorities of the Department of his own. The respondents have also failed to explain or justify the insistence of SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 16/17 such condition before this Court either. The constant insistence of such a condition by one of the authorities of the RRVPNL is rather curious and cannot be justified. In the facts and circumstances of the case, withholding of payment on that ground on the basis of alleged orders passed by the Energy Department of the Government of Rajasthan vide Annex.R2/1 and R2/2 which were never communicated to the petitioner at any point of time also cannot be justified. 14. Accordingly, this writ petition is allowed and the impugned communication Annex.11 datd 21.12.2000, Annex.20 dtd.11.3.2004 and Annex.23 dtd.18.7.2005 are quashed and the respondents are directed to release the withheld 30% balance payment for aforesaid period from 21.12.2000 to June, 2001 due to be paid to the petitioner against the supply of power made by the petitioner company to the respondents in terms of Annex.4 dated 4.10.2000 within a period of two months from today. If entire payment is not made within the said period of two months, the same shall carry interest @9% p.a. from the date of this judgment till the actual date of payment. SBCWP NO.2390/2006 –BINANI CEMENT LTD. V/S STATE OF RAJASTHAN AND ORS. : JUDGMENT DTD.28.4.2008 17/17 15. In view of unjustified insistence by the respondent No.4 Mr. S.C. Datta, Superintending Engineer (Commercial) on the petitioner Company to install the frequency based meter, this Court imposes a cost of Rs.5000/- on the said authority, which is to be borne and paid by him to the petitioner – company. 16. The writ petition is accordingly allowed with costs as indicated above. (Dr.VINEET KOTHARI)J. Item No. Ss/-