* HON’BLE SRI JUSTICE B.PRAKASH RAO AND *HON’BLE SRI JUSTICE R.KANTHA RAO + W.P.NOs. 22733, 23902, 27847, 27678 and 22682 of 2009 % Date: 28.02.2011 W.P.NO.22733 OF 2009 BETWEEN: # People’s Monitoring Goup of Electricity Regulation (PMGER) and others Petitioners $ Government of Andhra Pradesh, Rep.by its Spl.Chief Secretary. And others .. Respondents W.P.NO.23902 OF 2009 BETWEEN: # Communist Party of India A.P.State Council, Maqdoom Bhavan, Hyd. Petitioner $ Government of Andhra Pradesh, Rep.by its Spl.Chief Secretary. And others .. Respondents W.P.NO.27847 OF 2009 BETWEEN: # G.V.K. Industries Limited and another. Petitioners $ A.P. Electricity Regulatory Commission and others .. Respondents W.P.NO.27678 OF 2009 BETWEEN: # G.V.K. Goutami Power Ltd. and another. Petitioners $ A.P. Electricity Regulatory Commission and others .. Respondents W.P.NO.22682 OF 2009 BETWEEN: # M/s G.V.K. Power Ltd and another. Petitioners $ A.P. Electricity Regulatory Commission and others .. Respondents ! Counsel for petitioners: Sri K.S.Murthy Sri Prabhakar Bommagani, Sri V.Akshaya Babu and Sri K.Priyadharhan Reddy Advocates Counsel for Power Generating Units ^ Counsel for respondents: The Advocate General, G.P. for Energy, Sri P.Sriraghuram, Sri K.S.Gopalakrishnan, Sri K.P.Peddaiah Yadav, party in person Sri O.Manohar Reddy, Standing counsel for A.P. Transco. < GIST: >HEAD NOTE: ? Cases referred: [1] 2010(4) SCC 603 2 2010(5) Supreme Today 338 3 AIR 2001 SC 107 4 AIR 2002 SC 3588 5 AIR 1999 SC 22 HON’BLE SRI JUSTICE B.PRAKASH RAO AND HON’BLE SRI JUSTICE R.KANTHA RAO W.P.NOs. 22733, 23902, 27847, 27678 and 22682 of 2009 DATED : 28.02.2011 W.P.NO.22733 OF 2009 BETWEEN: People’s Monitoring Goup of Electricity Regulation (PMGER) and others Petitioners Government of Andhra Pradesh, Rep.by its Spl.Chief Secretary. And others .. Respondents W.P.NO.23902 OF 2009 BETWEEN: Communist Party of India A.P.State Council, Maqdoom Bhavan, Hyd. Petitioner Government of Andhra Pradesh, Rep.by its Spl.Chief Secretary. And others .. Respondents W.P.NO.27847 OF 2009 BETWEEN: G.V.K. Industries Limited and another. Petitioners A.P. Electricity Regulatory Commission and others .. Respondents W.P.NO.27678 OF 2009 BETWEEN: G.V.K. Goutami Power Ltd. and another. Petitioners A.P. Electricity Regulatory Commission and others .. Respondents W.P.NO.22682 OF 2009 BETWEEN: M/s G.V.K. Power Ltd and another. Petitioners A.P. Electricity Regulatory Commission and others .. Respondents HON’BLE SRI JUSTICE B.PRAKASH RAO AND HON’BLE SRI JUSTICE R.KANTHA RAO W.P.NOs. 22733, 23902, 27847, 27678 and 22682 of 2009 COMMON JUDGMENT: ( Per RKR,J ) All the writ petitions involve common questions relating to the same subject matter. Thus they are heard and disposed of jointly by the following common judgment: 2. W.P.No.22733 of 2009 is filed by the Peoples Monitoring Group on Electricity Regulation (for short PMGER), Hyderabad and by Mr M.Thimma Reddy, representing the first petitioner as its convenor against the Government of Andhra Pradesh and other parties, which include certain power generating units for a writ of mandamus declaring the action of the first respondent- Government of Andhra Pradesh therein in issuing G.O.Rt.No.135 dated 13.10.2009 and not permitting the third respondent-Andhra Pradesh Electricity Regulatory Commission to complete its enquiry on the proposed amendments to PPAS which were earlier entered into with the IIPS on truing up mechanism etc to be arbitrary, illegal and violative of Articles 14 and 21 of the Constitution of India and consequently to set aside the G.O.Rt.No.135, dated 13.10.2009. 3. W.P.No.23902 of 2009 is filed by the Communist Party of India, a National Political Party seeking the same relief. 4. Whereas the Writ Petition No.27678 of 2009 is filed by the GVK Gautami Power Limited, a power generating unit and Mr Krishna Ram Bhupal one of the share holders of the GVK Gautami Power Limited seeking issuance of a writ of certiorari to set aside and quash the order dated 05.12.2009 passed by the Andhra Pradesh Electricity Regulatory Commission reviewing the O.P.No.10 of 2009 and to declare that PPA initiated by the parties on 26.05.2008 stands amended to the effect that the petitioner can sell 20% of the capacity of its power project as per G.O.Rt.No.135 dated 13.10.2009. 5. Writ Petition No.27847 of 2009 is filed by the GVK Industries Limited and one Mr Krishna Ram Bhupal, who is one of the share holders of GVK Industries Limited for the same relief. 6. Writ Petition No.22682 of 2009 is filed by the GVK Gautami Power Limited and one Mr Krishna Ram Bhupal one of the share holders of the company for a writ of certiorari to set aside and quash the order dated 15.10.2009 passed by the APERC inviting objections to G.O.rt.No.135, dated 13.10.2009 from the third parties and for further directions to the Commission to pass consequential orders in the light of G.O.Rt.No.135 dated 13.10.2009 under Section 108 of the Electricity Act, 2003 in O.P.No.10 of 2009 pending before the Commission. 7. We have heard Sri K.S.Murthy, Sri Prabhakar Bommagani, Sri V.Akshaya babu and Sri K.Priyadharshan Reddy, learned counsel appearing for the power generating units and the learned Advocate General, G.P. for Energy, Mr P.Sriraghuram, Mr K.S.Gopalakrishnan, Mr K.P.Peddaiah Yadav, who appeared as party-in-person and Mr O.Manohar Reddy, learned Standing counsel for A.P.Transco. 8. For the convenience sake, we refer the power generating units as independent power producers (IPPs) and the remaining parties by the names as mentioned in the writ petitions. 9. The short facts necessary for disposing of the writ petitions may be stated as follows: 10. In the year 1995, the A.P. State Electricity Board (for short APSEB) invited global tenders from the private parties for setting up short gestation power projects across the state for adding additional generation capacity and in the said process the APSEB and the Government of Andhra Pradesh (GoAP) selected six developers and Gauthami Power Limited (GPL) was one of the selected developers. On 31.03.1997 the power purchase agreement (PPA) was entered into between GPL and the erstwhile APSEB. As per the agreement, the power projects were to be set up based on liquid fuels, such as naphtha, HPS and LSHS as primary fuel. 11. On the grievance put forth by the GPL and other IPPS before APPCC and high powered committee constituted by the Government of Andhra Pradesh that they had incurred heavy losses due to delay in commissioning of the power project owing to the delay in providing inter connectivity, 400 KV power supply and not recommending for providing the gas for the purpose of commissioning, negotiations were held and ultimately at the request of the OPPS the GOAP was inclined to allow 20% of the total generation of electrical energy from the power projects to be sold to the third parties. They would be allowed to sell 20% of the installed capacity to the third parties for the PPA period in order to absorb their losses. Accordingly, the proposed amendments were submitted for concurrence and acceptance of APPCC and thereafter APPCC informed the approval of the High Powered Committee of the GOAP of the proposed amendments. Subsequently, APDISCOMs filed a petition before the APERC on 30.05.2008 (which was later numbered as O.P.No.10 of 2009) seeking consent of the commission for the amendments. The commission upon considering similar amendments proposed in respect of GVK Industries Limited (O.P.No.9 of 2009) M/s Konaseema EPS Oakwell Power Limited (O.P.No.11 of 2009), M/s Vemagiri Power Generation Limited (O.P.No.12 of 2009), also afforded public hearing and when the matter was posted for further hearing on 11.11.2009 and the hearing by the commission was in progress the Government of Andhra Pradesh issued G.O.Rt.No.135, dated 13.10.2009 permitting GPL and other IPPs to sell 20% of their generating capacity to the third parties to enable them to recoup part of their losses and in the bargain the IPPS have agreed to delete the alternate fuel clause from the PPA. 12. After issuance of the said G.O. the APDISCOMS submitted an additional affidavit along with G.O.Rt.No.135 dated 13.102009 before the Commission with a request to receive the same and pass appropriate orders in terms of G.O.Rt.No.135. By its order dated 05.12.2009, the Commission inter alia held that it is not able to agree with the proposition of permitting open market sale of 20% PPA capacity plus any tested capacity over PPA capacity, that too without any true-up mechanism, is the only appropriate method to achieve objective of making good the losses allegedly suffered by IPPS. 13. The commission expressed the view that if the amendments package is suitably reworked and a fresh proposal is filed before the Commission based on any of the three options indicated by it in it’s order with an appropriate true-up mechanism and consent sought thereof, the same can be considered by the commission as a fresh proceeding. 14. Ultimately, the commission while continuing operation of interim orders issued by it regarding the usage of gas other than from GAIL in respect of clause 3.3.(case ii), rejected the proposed amendment so far as it relates to permitting the IPPS to sell 20% of the capacity of their power project to the third parties as stated in G.O.Rt.No.135, dated 13.10.2009. 15. It has been contended before us by the learned counsel appearing for the IPPs that G.O.Rt.No.135 dated 13.10.2009 was issued by the Government of Andhra Pradesh under Section 108 of the Electricity Act, 2003, it involves policy decision and therefore by virtue of Section 108 of 2003 Act, the A.P. Electricity Regulatory Commission has to give assent to the said G.O. and has to approve the amendments proposed under the said G.O. 16. On the other hand, it has been contended by the learned counsel appearing for the PMGER, the Communist Party of India, Mr.K.P. Reddaiah Yadav who appeared as party-in-person that the G.O.Rt.No.135 dated 13.10.2009 does not involve any policy, even if it does involve, the said G.O. is not binding on the A.P.E.R.C. under the scheme of A.P. Electricity Reforms Act,1998, Electricity Regulatory Commission Act,1998 and Electricity Act, 2003, the A.P.E.R.C. is an independent expert body which has jurisdiction in relation to fixation of tariff and also to regulate the terms of the licence. Thus, according to the learned counsel, the order dated 05.12.2009 passed by the A.P.E.R.C. is strictly within its jurisdiction and as part of its functions assigned to it under the above mentioned Acts and the order cannot be called in question by the IPPs. 17. It has further been contended that in view of the alternative remedy available from the decision of the APERC by way of an appeal under Section 111 of the Electricity Act, 2003 to the Appellate Tribunal for Electricity and the remedy being appropriate and efficacious, the independent power projects cannot invoke the jurisdiction of this Court under Article 226 of the Constitution by filing the writ petitions while the matter is still pending enquiry before the APERC and thus, the writ petitions filed by them are not maintainable. 18. The APERC which has been established by the State Government under the Electricity Regulatory Commission Act, 1998, continuous to discharge its functions under the Electricity Act, 2003. It has not only the power to determine the structure of tariff but the said power extends to regulate the contracts entered into by the IPPs. Section 86 of the 2003 Act confers on the commission vide regulatory powers. However, clause 4 of Section 86 lays down that in discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under sub- section 2 of section 3. 19. Section 108 of the Act dealing with the directions by the State Government lays down, as follows: 1) In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy involving public interest as the State Government may give to it in writing; 2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the State Government thereon shall be final. 20. Referring to section 108, the learned counsel appearing for the IPPs contended that when the direction issued by the State Government relates to a matter of policy involving public interest, the decision of the State Government is final, and thus the commission is obliged to approve the amendments proposed in G.O.Rt.No.135. 21. The crucial question therefore, is whether the decision of the government to allow the GPL and other IPPs to sell 20% of their capacity to third parties to re-coupe part of their losses, upon consent given by the IPPs to delete the alternate fuel clause is a matter of policy involving the public interest. 22. The contention of PMGER, the Communist Party of India and Sri K.P. Reddaiah Yadav, 12th respondent- party-in-person is that the decision of the State Government in terms of G.O.Rt.No.135 permitting the IPPs to sell 20% PPA capacity and entire excess capacity in the open market will jeopardize the agriculture and industries in the State and causes heavy loss to the consumers and the said G.O. is nothing but adverse to the public interest. They would further contend that absolutely there is no criteria before the government of Andhra Pradesh about the loss actually incurred by the IPPs except the vague statement of IPPs that they had incurred loss to the tune of 1100 crores, the concession proposed to be given works out to more than 20,000 crores and thus, according to them the proposed amendment is in the nature of jeopardising the public interest and only aims at unlawful enrichment of IPPs without any basis or criteria. 23. We are not inclined to delve into the issue as to whether the impugned G.O. was issued in the public interest or whether only to enable the IPPs to make huge profits, we think it enough to examine the issue as to whether while approving or rejecting the proposed amendments, the commission can go into the question whether the said G.O. involves any policy decision and was issued in public interest. 24. The commission is an expert regulatory body and it discharges its statutory functions. As we have already said it’s function is not merely to determine the structure of tariff but extends to reviewing the terms of the contract entered into by IPPs from time to time to balance the interests of IPPS with that of the consumers.. 25. Although in its common counter-affidavit the government of Andhra Pradesh stated that G.O.Rt.No.135 dated 13.10.2009 was issued as a measure of policy for the said purpose, specifically mentioned therein that the government does not intend that this direction under G.O.Rt.No.135, dated 13.10.2009 issued under Section 108 of the Electricity Act,2003 to be binding on the third respondent commission and it is reiterated that the impugned G.O.Rt.No.135, dated 13.10.2009 is issued subject to further and final approval of the commission to the amendments proposed. 26. In the common counter affidavit filed by the Government of Andhra Pradesh it has been specifically asserted that the government by issuing the impugned G.O.Rt.No.135 had never intended to rule out the adjudication by the third respondent commission in regard to the subject matter. Since we are dealing with the pure question of the extent of the power and the jurisdiction of the commission as part of its statutory functions, we think it not appropriate to go into the merits regarding the grievances put-forth by the IPPs and the concession proposed to be given under G.O.Rt.No.135. In this context we may point out that the commission also in its common order stated that it is willing to accept the approach suggested by the government which is contained in G.O.Rt.No.135 as far as recognizing the financial difficulties of the DISCOMs in making any likely fixed charge entitlement amounts in a lump sum manner, and the necessity of evolving some mechanism to enable the IPPs to realize the likely fixed charge entitlement they might be foregoing by agreeing to the amendments. 27. The commission, however, made it clear that it is not able to agree with the proposition that permitting open market sale of 20% PPA capacity plus any tested capacity over PPA capacity, that too without any true up mechanism, is the only appropriate method to achieve the objective. The commission suggested certain alternatives for the purpose of the objective sought to be achieved under G.O.Rt.No.135. 28. The commission by considering various view points demonstrated at the public hearing relating to OP Nos.9 to 12 of 2009 expressed its opinion that an appropriate truing up mechanism through a transparent and appropriate methodology is necessary and can be evolved by an arrangement of periodical financial monitoring of the additional revenues likely to be received by the IPPs in implementation of any of the three methodologies. The commission was of the view that if the amendments package is suitably re-worked on the above lines and a fresh proposal is filed before the commission based on any of the three options indicated by it with an appropriate true-up mechanism and consent sought therefor, the same can be considered by the commission as a fresh proceeding. 29. Before arriving at a decision, we think it essential to refer to the following judgments. The Hon’ble Supreme Court in PTC INDIA LTD. v. CENTRAL REGULATORY COMMISSION[1] referring to scope and analysis of the 2003 Act stated at para 17 as follows: “The 2003 Act is enacted as an exhaustive Code on all matters concerning electricity. It provides for "unbundling? of SEBs into separate utilities for generation, transmission and distribution. It repeals the Indian Electricity-Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998, The 2003 Act, in furtherance of the policy envisaged under the Electricity Regulatory Commissions Act, 1998 ("1998 Act"), mandated the establishment of an independent and transparent regulatory mechanism, and has entrusted wide ranging responsibilities to the Regulatory-Commissions. While the 1998 Act provided for independent regulation in the area of tariff determination; the 2003 Act has distanced the Government from all forms of regulation, namely, licensing, tariff regulation, specifying Grid Code, facilitating competition through open access, etc.” 30. I n TRANSMISION CORPORATION OF A.P. LTD. AND ANOTHER v. SAI R.P. LTD. AND OTHERS[2] the finding recorded by the Tribunal that the regulatory commission has neither the power nor jurisdiction to compel the developers to sell the power generated by them to A.P.TRANSCO and/or DISCOM was challenged. The commission restricted the sale, procurement and distribution of electricity by the developers to any other party except A.P.TRANSCO. 31. The Supreme Court held that: “fixation of tariff is, primarily, a function to be performed by the statutory authority in furtherance to the provisions of the relevant laws. It is a statutory function as specified under the provisions of the Reform Act, 1998, Electricity Regulatory Commissions Act, 1998 and the Electricity Act, 2003. These functions are required to be performed by the expert bodies to whom the job is assigned under the law”. “The functions assigned to the regulatory commission are wide enough to specifically impose an obligation on the regulatory commission to determine the tariff. The specialized performance of functions that are assigned to regulatory commission can hardly be assumed by any other authority and particularly, the courts in exercise of their judicial discretion. The Tribunal constituted under the provisions of Electricity Act, 2003, again being a specialized body is expected to examine such issues, but this court in exercise of its powers under Article 136 of the Constitution would not sit as an appellate authority over the formation of opinion and determination of tariff by the specialized bodies. We would prefer leave these questions open to be considered by the appropriate authority at appropriate stage.” 32. In CHITTOOR ZILLA VYAVASAYADARULA SANGHAM Vs ANDHRA PRADESH STATE ELECTRICITY BOARD[3] dealing with similar situation arising under Electricity (Supply) Act (54 of 1948) the Supreme Court held as follows: “The Board and the State Government have to perform their obligations within the limits they have been entrusted with. Section 78-A empowers the State Government to issue directions to the Board on question of policy, on the other hand the Board has to perform its statutory obligations under the said Act and with reference to the fixation of tariff it has to act in terms of what is contained in Ss. 49 and 50. If any policy direction pushes the Board in its compliance beyond statutory limitations, it cannot be a direction within the meaning of S. 78-A. It is significant that opening words of S. 78- A is, "in the discharge of its functions, the Board shall be guided by such directions." So, the direction of the State is for the guidance to the Board, in the discharge of its functions. Thus this direction has also limitation to give such direction which will subserve in performing its statutory obligation.” 33. In WEST BENGAL ELECTRICITY RETULATORY COMMISSION v. C.E.S.C. LTD.[4] the Supreme Court held that the State Electricity Regulatory Commission is a high powered expert committee and it has autonomous authority and is expected to function independently. It is further held that the fixation of tariff is the function exclusively assigned to the State Electricity Regulatory Commission and the consumers have a legal right to be heard in the proceedings before the commission and such a right which is conferred under the Act cannot be taken away by the Court. 34. Another important issue which is to be addressed is, in view of the availability of an appeal against the order passed by the Commission under Section 111 of the Act,2003 to the Appellate Tribunal for Electricity, whether the parties in the writ petitions cannot invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution. 35. The learned counsel appearing for the IPPs relied on a judgment of the Supreme Court in WHIRLPOOL CORPORATION v. REGISTRAR OF TRADE MARKS MUMBAI AND OTHERS[5] wherein the Supreme Court held as follows: “Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principle of natural justice or where the order of proceedings are wholly without jurisdiction or the vires of an Act is challenged.” 36. The learned counsel submit that in exceptional circumstances despite the availability of alternative remedy, the parties can invoke the writ jurisdiction under Article 226 of the Constitution. They would further submit that since the order dated 05.12.2010 passed by the APERC is without jurisdiction and unsustainable, the remedy by way of statutory appeal under Electricity Act, 2003 does not operate as bar for maintaining the present writ petitions. They asserted that it is obligatory on the part of APERC to implement the G.O.Rt.No.135 issued by the Government of Andhra Pradesh by accepting the amendments and the commission cannot take a different view. 37. We are unable to accede to the submission. As noticed by us hereinbefore, the legislature by establishing the regulatory commissions entrusted the functions of tariff determination and the tariff regulation exclusively to the regulatory commissions under the scheme of A.P. Reforms Act, 1998 and Electricity Act,2003. The commissions are also invested with the power to regulate the terms of the contracts by IPPs. The commission is an expert body and it discharges statutory functions concerning tariff determination and the related issues. A combined reading of Reforms Act,1998 and Electricity Act, 2003 makes it obvious that by virtue of these enactments, the State is practically divested of the regulatory functions which is now in the exclusive domain of regulatory commission subject to appeal as provided under 2003 Act. Section 175 of the 2003 Act lays down that the provisions of this Act are in addition to and not