HON’BLE SRI JUSTICE C.V. RAMULU W.P.No. 8231 of 2005 Date: 28-09-2010 Between: M/s. Sudalagunta Sugars Ltd., ……….. Petitioner and The Chairman and Managing Director and others ………. Respondents HON’BLE SRI JUSTICE C.V. RAMULU W.P.No. 8231 of 2005 ORDER: This writ petition is filed seeking a Mandamus declaring action of the respondents in not adjusting the import energy during the months of August, 2002 to November, 2003 against the banked energy of the petitioner and raising the bills for the said two months, as arbitrary, illegal and without jurisdiction. 2. The admitted facts are as under: Petitioner is an integrated sugar factory with cogeneration of power near Srikalahasti, Chittoor District. Petitioner was sanctioned 8 Mega Watts bagasee cogeneration plant at it’s sugar factory by NEDCAP vide sanction letter No.NEDCAP/PD/4323/95-96/215, dated 07-04-1997. The petitioner was permitted for captive consumption of 3 Mega Watts during the season and 1.2 Mega Watts during off-season. The sugar mill with 3 Mega Watts power generation went operational on 22-11-1997. Subsequently, 5 Mega Watts power generator was added and commissioned on 09-06-1999. The crushing season of the sugar factory commences from the first week of December and ends in April of the succeeding year. During the crushing season, the petitioner consumes around 3 Mega Watts of power for crushing and auxiliary needs. During off season, it consumes around 1.2 Mega Watts of power for operating boiler, feed pumps, auxiliary drives, cooling pump tower drives etc. The petitioner cogeneration plant also supplies power produced by it to A.P. TRANSCO and it is fed to the grid at Buchinaidu Kandriga sub-station. Under the power purchase and wheeling agreement, dated 29-01- 2000 entered into between the petitioner and TRANSCO, petitioner is entitled to sell it’s excess power to third parties through the transmission and distribution systems of TRANSCO. The TRANSCO collects wheeling charges from the generating company for the said utilization of the system. The generating company is also entitled to bank the excess energy after meeting the captive consumption and third party sales with the TRANSCO. According to the petitioner, the provisions in the Power Purchase & Wheeling Agreement, dated 29- 01-2000, relating to Banking are as follows: Clause 2.23.1 stipulate that A.P. TRANSCO shall accept for banking of any emergency part of the unallocated energy and/or unutilized energy by scheduled consumers in a billing month. Article 2.23.3 stipulate that banking of energy shall be allowed of any energy delivered during the 12 months of any year for captive consumption or for the sale to 3rd party. Article 2.23.5 stipulate that banking arrangement shall be valid for tariff year, that such banked energy would be wheeled only between August to March of the succeeding tariff year in regard to 3rd party sale, and for all 12 months in case the energy is used for captive consumption and any net banked energy not subjected to wheeling in succeeding tariff year shall lapse. 3. While that being so, the Chief General Manager (Exper), APSPDCL addressed a letter, dated 09-11-2004 to the petitioner stating that as per Clause 2.15 of PP & WA, the Senior Accounts Officer (Opn.), Tirupathi has issued CC bills for the excess of import energy supplied by APSPDCL over the export energy by the petitioner during the months of August, 2002 and November, 2003, but petitioner has not paid bills and that if bills are not paid immediately with surcharge, all the live services of petitioner sister concerns will be disconnected. The petitioner has received a combined bill for August, 2002 and November, 2003 with huge surcharge from the Senior Accounts Officer, APSPDCL signed on 22-12-2004. Though the petitioner filed a detailed representation, dated 05-01-2005 to the Chairman and Managing Director, A.P. TRANSCO requesting it’s intervention and to resolve the problem, instead of solving the problem in the right spirit, the Chief General Manager (Exper), APSPDCL addressed a letter, dated 10-03-2005 directing the petitioner to pay the amounts raised in two CC bills along with surcharge within seven days from the date of receipt of the letter, failing which the wheeling of the delivered energy of the petitioner will be stopped from the billing month of March, 2005 and all the live services will be disconnected. Therefore, the writ petition. 4. It is the case of the petitioner that the surplus energy, generated by it, is banked with the TRANSCO under the agreement apart from the energy supplied to the scheduled consumers including the unutilized energy of the scheduled consumers and they are entitled to utilize the same as and when required in all the 12 months. Whereas, the scheduled consumers are entitled to utilize the same between the months of August and March. Though there is a surplus energy available to the account of the petitioner, the impugned bills were raised, which is arbitrary and illegal. 5. A detailed counter affidavit has been filed by the respondents denying the allegations made by the petitioner and it is asserted that the petitioner is not entitled for supply of any energy, which is said to be surplus and banked with the TRANSCO. In this regard, the learned counsel appearing for the respondents relied upon Clauses 2.15 and 2.23.5 of Article 2 of the Power Purchase and Wheeling Agreement, dated 29-01-2000 and stated that only the scheduled consumers are entitled to draw the allocated energy to them. Whereas for the purpose of captive consumption, the question of reverting back to the generator, even if it is surplus, is not permissible under the said clauses. 6. I have given my earnest consideration to the respective submissions made by the learned counsel on either side and perused the impugned bills and other material available on record. 7. In this regard, it may be necessary to notice the definitions as available under the Power Purchase & Wheeling Agreement entered into between the petitioner and e TRANSCO. Under Article 1-Definitions, Clauses 1.4, 1.6, 1.15 and 1.16 read as follows: “1.4 Banking: means keeping in reserve, the delivered energy supplied to the APTRANSCO, in any billing month(s), in excess of the energy required to be wheeled by the APTRANSCO to the scheduled consumers in that month, with the purpose of wheeling such excess energy in any succeeding month(s) to the scheduled consumers, subject to the condition specified in Article 2 of this Agreement. Such excess energy is, hereinafter ‘Banked energy’. 1.6 Delivered Energy: means, with respect to any Billing Month, the kilo watt hours (kWh) of electrical energy generated by the Project and delivered to the APTRANSCO at the Interconnection Point as measured by the energy meters at the Interconnection Point during that Billing Month. Explanation: For the purpose of clarification, Delivered Energy excludes all energy generated and consumed in the project by the main plant and equipment, lighting and other loads of the Project. Delivered Energy is comprised of Wheeled Energy and Surplus Energy. 1.15 Surplus Energy: means the portion of the Delivered Energy, if any, after allocation to the Scheduled Consumers identified for third party sale and/or for captive consumption, which will be purchased by APTRANSCO at the rate specified in Article 4.2. Explanation: The computation of the Wheeled Energy, Banked Energy and Surplus Energy purchased in any given Billing Month shall be computed in a manner consistent with the examples given in Schedule 5 with wheeling charges given in Article 2.4. 1.16 Scheduled Consumer: means the consumers of the APTRANSCO listed in Schedule 4 attached to this agreement, and any other high tension (voltage) consumers of the APTRANSCO located in the State of Andhra Pradesh receiving power from the APTRANSCO at a voltage of 11 kilo volts (kV) and above; to whom Wheeled Energy is desired by the Company to be Wheeled by the APTRANSCO, as per the prior approval of the APTRANSCO. Explanation 1: If such scheduled consumer is substantially owned and controlled by the same group as the Company, the energy is deemed to have been wheeled to the sister concern. Explanation 2: If such scheduled consumer is not substantially owned and controlled by the same group as the Company, the wheeling is considered as third party sales, subject to the condition as per Article 3.4 and Article 8.2 (iv). Explanation 3: If the developer wants any change in the list of scheduled consumers, during the term of agreement, he shall submit such a list to APERC through APTRANSCO and get APERC approval. APTRANSCO implements such approval taking into system exigencies. However, only two (2) amendments per financial year to Schedule 4 of this Agreement shall be permitted in view of the work involved in billing.” Under Article 2-Wheeling and Banking of Energy, clauses 2.12 to 2.15, 2.23 and 2.23.1 to 2.23.5 read as under: 2.12. Where, in any billing month, any of the Scheduled Consumers, does not consume the whole or any part of the Allocated Energy allocated to him by the Company, such Unutilised Energy not so consumed, can be banked by the Company which shall be wheeled to Scheduled Consumers, in any subsequent month on the same Terms and Conditions as are applicable to regular Wheeling of Energy under this Agreement. The Unutilised Energy not so consumed in any billing month (but so banked) shall be ignored in computing the Delivered Energy and the Delivered Capacity in that billing month and added up to the Delivered Energy and Delivered Capacity in the billing month in which it is wheeled from out of the baked energy. 2.13. The voltage and frequency at which Delivered Energy is delivered to the APTRANSCO shall be in sychronism with the voltage and frequency of the generate electricity in accordance with prudent Engineering practices applicable for operation of similar utilities by the APTRANSCO. 2.14. The company shall ensure that the power factor of the power delivered to the APTRANSCO is maintained at Minimum Power Factor as per Tariff. 2.15. Where in any Billing Month, the Delivered Energy is less than the energy supplied by the APTRANSCO to the Company, the difference, being excess energy supplied by the APTRANSCO, shall be billed by the APTRANSCO, and the Company shall pay the APTRANSCO for such electricity supplies, at the APTRANSCO’s then effective tariff applicable to High Tension Category-I Consumers. For this purpose, the maximum demand specified in such tariff shall be computed by dividing the amount of such excess energy supplied by the APTRANSCO by the total hours in the Billing Month. 2.23. Banking 2.23.1 The APTRANSCO shall accept for banking of any part of the unallocated energy and/or Untilised Energy by Scheduled Consumers in a billing month. 2.23.2 The gross energy so banked shall be subject to a banking charge of two (2) percent thereof and only 98 percent of such energy shall be available for future wheeling, which shall be the net banked energy, subject to Article 11.3. 2.23.3 Banking of energy shall be allowed of any energy delivered (Delivered Energy) during the 12 months of any year, for captive consumption or for the sale to third party. 2.23.4 The net banked energy of one or more billing months shall be added to the Delivered Energy of any billing month or months, at the discretion of the Company, subject to a written notice in writing delivered to the APTRANSCO, at least one week prior to the start of the billing month, and wheeled to the Scheduled Consumers in the same manner and subject to the same conditions as regular Delivered Energy and Delivered Capacity. 2.23.5 Banking arrangement shall be valid for Tariff Year. However, such banked energy would be wheeled only between August to march of the succeeding Tariff year in regard to third party sale, and for all 12 months in case the energy is used for captive consumption, and any net banked energy not subjected to wheeling in succeeding Tariff Year shall lapse. No part of the net banked energy shall be wheeled to the scheduled consumers in case of third party sale during the month of April, May, June and July of any year.” 8. There is no necessity of going into all the details. It is suffice to notice that Clause 2.23.1 contemplates that the TRANSCO shall accept for banking of any part of the unallocated energy and/or unutilized energy by scheduled consumers in a billing month. This itself shows that whenever there is excess production of energy unallocated, the same shall be accepted by the TRANSCO for the purpose of banking. Further, the banking of energy shall be allowed of any energy delivered (Delivered Energy) during the 12 months of any year for captive consumption or for the sale to third party. With this in mind, it is necessary to examine Clause 2.23.5 which contemplates that in case of energy is used for captive consumption, banking arrangements shall be valid for a tariff year and such banked energy would be wheeled only between August to March of the succeeding tariff year in respect of third party sale/scheduled consumers. Whereas it shall be wheeled for all the 12 months in case of energy used for captive consumption. Only the net banked energy not subjected to wheeling in the succeeding Tariff year shall lapse. That question does not arise insofar as the present case is concerned. 9. It is not the case of the respondents-TRANSCO that there was surplus energy generated by the petitioner co-generating company or it is not banked with it as required under the agreement. The only contention of the respondents is that there is no provision in the agreement for the purpose of banking the surplus energy generated by the petitioner and for being reutilized by it from the TRANSCO. This contention of the respondents appears to be not true in view of the combined reading of Clauses 2.23.1, 2.23.3 and 2.23.5 of Article 2 of the Agreement. 10. The learned counsel for the respondents raised, yet, another question as to the maintainability of the writ petition. It is his contention that under Section 86 (1) (f) of the Act of 2003, an alternative remedy of raising a dispute before the regulatory commission is available. Section 86 (1) (f) of the Act of 2003 reads as under: “86. Functions of State Commission – (1) The State Commission shall discharge the following function, namely— (f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration;” 11. The said provision contemplates the dispute between the generating company and the TRANSCO and not otherwise. The generating company and co-generating company are clearly defined under the Act of 2003. Though the learned counsel for the respondents tried to impress upon the Court that once a generating company is defined, it includes co-generating company since the nature of the activity undertaken is one and the same. Such an argument cannot be accepted in view of the fact that the legislature, in its wisdom, has defined co-generating company and generating company separately and Section 86 (1) (f) of the Act of 2003 deals with the disputes that can be raised before the commission only by the generating companies and the TRANSCO etc. 12. For all the above reasons, I am of the opinion that the impugned bills raised by the respondents against the petitioner do not stand to scrutiny of law and liable to be set aside and accordingly, set aside. 13. The writ petition is, accordingly, allowed. No order as to costs. _____________ C.V. RAMULU, J Date: 28-09-2010 YCR