Case: TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED Vs. M/S RAIN CALCINING LIMITED & OTHERS


Decision reasoning: 1[ds]Explanation attached to Section 26 makes it clear that tariff means a schedule of standard prices or charges for specified services that are applicable to all such specified services provided to the type or types of customers specified in the tariff notification.In our opinion, the Commission constituted under the Reforms Act, 1998, has the power to determine the wheeling charges. We are not at all impressed by the submission raised by learned Senior Counsel appearing on behalf of respondents-Companies. The State Commission constituted under the Reforms Act, 1998 has the power to deal with the transmission. The expression ?area of transmission? is defined under Section 2(a). Grant of transmission licenses by the Commission is dealt with in Section 15. The ?licensee? or ?licence holder? is a person holding a licence under Section 14 to transmit or supply energy, including APTRANSCO, as defined under Section 2(e). ?Transmission licence? means a licence granted under Section 15(1)(a), and ?transmit? has also been defined in Section 2(p). The Commission has extensive and pervasive power to deal with the transmission.Section 26 of the Reforms Act, 1998, provides that each licensee holding license, granted under the Act, shall observe the methodologies and procedures specified by the Commission from time to time in calculating the expected revenue. The Commission shall subject to the provisions of Section 26(3), be entitled to prescribe the terms and conditions for the determination of the licensee?s revenue and the tariffs and for that it may also frame the regulation and the Commission shall be bound by the parameters of financial principles and their applications provided in the Sixth Schedule to the Electricity Act, 1948 read with Sections 57 and 57-A. Thus, the licensee is required to submit a calculation of annual expected aggregate revenue, and the Commission has the power to fix the tariff for the licensees that would include the licence for transmission also. The Commission, while fixing the wheeling charges, has to act upon the settled principles as specified in the order and in consonance with the provisions contained in Sections 11, 15, and 26.As to the question of fixing of wheeling charges, the High Court has erred in holding that the Commission has no power to fix the wheeling charges. It is the regulator for transmission, and considering the various provisions mentioned above, it is apparent that the Commission had the power to fix the wheeling charges.The Andhra Pradesh Electricity Regulatory Commission (Business Rules of the Commission), Regulations, 1999 (for short, ?the 1999 Regulations?), have been framed in exercise of powers conferred by Section 9, Sub-Section 2 and Section 54, Sub-Section (2)(a) of the Reforms Act, 1998 and they have been amended by Regulations of 2000. The Regulations reflect a broad spectrum of powers and various functions relating to fixation of the tariff. Regulation 45-A deals with expected revenue from charges and tariff proposals. Regulation 45-B deals with the fuel surcharge adjustment formula. The submission raised on behalf of respondents that the Commission could not fix wheeling charges when there was no regulation in vogue. Be that as it may. The section itself provides the guidelines apart from the fact that regulation also exists.The Andhra Pradesh Electricity Regulatory Commission (Business Rules of the Commission), Regulations, 1999 (for short, ?the 1999 Regulations?), have been framed in exercise of powers conferred by Section 9, Sub-Section 2 and Section 54, Sub-Section (2)(a) of the Reforms Act, 1998 and they have been amended by Regulations of 2000. The Regulations reflect a broad spectrum of powers and various functions relating to fixation of the tariff. Regulation 45-A deals with expected revenue from charges and tariff proposals. Regulation 45-B deals with the fuel surcharge adjustment formula. The submission raised on behalf of respondents that the Commission could not fix wheeling charges when there was no regulation in vogue. Be that as it may. The section itself provides the guidelines apart from the fact that regulation also exists.Under regulations, various agreements have also been amended, and there is plenary power under the regulations to prescribe the tariff and charges concerning Transmission and Bulk Supply or Distribution and Retail Supply as provided in Regulation 45-A(2).Fuel Surcharge Adjustment Formula has been given in Regulation 45-B and Subsidies under Regulation 45-C. Under Regulation 45-A(8), it is clear that upon hearing the licensee and such other parties as the Commission considers appropriate and upon making such other inquiry, the Commission shall make an order and notify the licensee of its decision on the revenue calculations and tariff proposals, as provided in section 26(5) of the Reforms Act, 1998. Thus, on the strength of the decision in PTC India Ltd. (supra), it is clear that the contracts which were entered into stand superseded under the Reforms Act, 1998, by the regulations framed in the year 1999 as amended in the year 2000. Thus, the submission raised on behalf of the licensees that the concluded contracts are binding and estoppel was created and concerning the power of regulatory Commission to determine the wheeling charges is untenable. The commission can exercise the power of fixation of such charges, which power is legislative. The statutory contracts have been superseded by the regulations which have been made. No estoppel is created. It was not the subject matter of policy reserved for the Government under section 12 of the Reforms Act, 1998. As per section 26 (5), the exercise of fixation of charges can be done. There is no question of the applicability of promissory estoppel. There is no violation of principles of natural justice as the objections were invited, and the licensees were heard.Licensees have relied upon Indian Aluminium Company v. Kerala State Electricity Board, (1975) 2 SCC 414  , dealing with the power of the State Electricity Board under section 49 (1) to fix the tariff which did not enable the Board to nullify an agreement entered into by it as permitted under section 49 (3) thereof. In our opinion, the power of fixation of tariff under section 49 (1) of the Electricity Supply Act of 1948 and agreement entered into under section 49 (3) are different connotations. The provisions of the Reforms Act, 1998, empower the Commission to fix tariffs and charges for transmission, distribution, and the like. The entire power is given to the Commission, and the Constitution Bench of this Court has held in PTC India Ltd. (supra) that once regulations have been framed, they make an inroad into the concluded contract also. Thus, the decision is of no help. Section 49 (3) of the Electricity Supply Act, 1948 authorises the Board to fix different tariffs to supply electricity. The question in the present case is different.Reliance has been placed on the decision of this court in Karnataka Power Transmission Corporation Ltd. v. Amalgamated Electricity Co. Ltd., (2001) 1 SCC 586  , in which section 394 (2) of the Companies Act, 1956 relating to rights and entitlement, obligations and commitments of the transferee company by virtue of scheme of arrangements sanctioned by the Companies Court. It was held that the transferee company becomes legally bound and obliged to discharge all commitments. The decision is distinguishable and is based upon different provisions dealing with a different situation.The arguments raised by respondents that the policy decision of the State Government has force of direction in terms of section 78 (A) of the Electricity Supply Act, 1948, in order to promote and develop such generation, in pursuance to the guidelines issued by the Central Government in view of international treaties and conventions to which India is a party. It was further urged that the Central Government has taken a decision to invite private participation to augment energy generation, and there is a thrust on the development of renewable energy. The State Government had the power under section 12 of the Reforms Act, 1998 also, and the policy decision binds the Commission.The submission is stated to be rejected as policies are always subject to legislative interventions, and once the State Government has made statutory provision, it has to prevail, and we find that no such policy was contemplated to continue for all the times to come. The policy has culminated into the Reforms Act, 1998 itself, and the same indicates the obligations of the Government for reforms displayed in the statutory form for establishment of Commission and separation of distribution and transmission. Reforms have been made only because of the policies, and once they found statutory expression, they are bound to be followed.A submission was also raised concerning vested rights and concluded contracts that have already taken care of by the decision of PTC India Limited (supra) and discussion mentioned above.There is no question of attracting the equitable principles of promissory estoppel for which reliance has been placed on Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd., (1983) 3 SCC 379  , Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh & Ors., (1979) 2 SCC 409  , Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board & Ors., 1997 (7) SCC 251  , Andhra Pradesh Electricity Regulatory Commission v. R.V.K. Energy Private Limited & Anr., (2008) 17 SCC 769  , where the law laid down, cannot be said to be applicable in this case. There was no unequivocal promise in this case, and statutory provision can make inroad and supersede the contracts.Submissions were raised concerning the repugnancy of the Reforms Act, 1998. We find that once the Reforms Act, 1998 has been enacted, it has to prevail, and vires of provisions have not been questioned. The submissions raised concerning the repugnancy, on merits, have no legs to stand given the provisions contained in the Reforms Act, 1998. The question of repugnancy rightly had also not been raised before High Court and cannot be raised in this Court as an afterthought.Concerning the interpretation of the agreement, reliance has been placed on Adani Power (Mundra) Ltd. vs. Gujarat Electricity Regulatory Commission & Ors., AIR 2019 SC 3397  , in which this Court has observed that clauses in the agreement ought to be given a plain, literal, and grammatical meaning of the expression. There is no dispute with the proposition mentioned above, however, the provisions of the Reforms Act, 1998 are clear, candid, and empowers the Commission to determine the charges.The High Court has also held that joint applications were not maintainable. The APTRANSCO held Licence No.1/2000 for transmission and bulk supply and as per clause 20 read with clause 22, it is incumbent upon the APTRANSCO to refer the table of tariffs or even system charges/losses incurred under the system. Thus, a joint application is nothing, but an obligation under the licence, and no prejudice has been caused by submitting the joint application. Thus, the decision of the High Court, to the contrary, is found to be meritless. The issue of maintainability of joint application has also been dealt with by the Commission elaborately.The reason given for holding the joint application to be maintainable is that there is an integrated transmission distribution system in the State. The system is entirely owned and controlled by the APSEB initially, and after reforms, it has come into control of APTRANSCO till 31.3.2001. The present application is the first of its kind for the determination of applicable wheeling charges to the transmission distribution system. The objection is technical, and in case joint petitions are maintained, it has no adverse effect so long in substance as the Commission has decided to proceed to determine the issue relating to transfer DISCOMS and representative units and has determined tariffs which are fair to the consumers availing the wheeling services. The approach of the Commission, thus, could not be faulted by the High Court. Therefore, the decision of the High Court in this regard is also faulty and unsustainable.The High Court could not have interfered with the findings on merits taken by the experts without entering into the various aspects considered by the Commission. Thus, the finding on merits as to the determination of charges being illegal and improper in any manner, cannot be said to be sustainable. The High Court has not gone into various reasons, and the details considered by the Commission and once the expert body has determined specific tariffs, it is not for the courts to interfere ordinarily in such matters. We find the determination to be proper and do not suffer from any infirmity or illegality. The Commission has made an elaborate discussion for arriving at the figure mentioned above. The recovery network charges, tariff structure, and the question of wheeling charges in cash or kind have also been considered. Various relevant factors have been taken into consideration. The nature of the arrangement between APTRANCO and DISCOMS and inter se DISCOMS has been considered while deciding issue No.4.The use of the system cannot be isolated from losses in the system as they form an integral part of the system. All persons using the system should bear the system losses, whether technical or non-technical. Incidentally, the terms of a licence issued by APTRANSCO and DISCOMS specifically refer to deliver such electricity, adjust losses of electricity to a designated point. Technical losses in the system to be taken into account as these are also an integral part of the system. It is an integrated system where the electricity is supplied on displacement basis rather than direct conveyance of the particular electricity which is generated, the technical losses up to the voltage level at which the electricity is delivered along cannot be measured. The technical losses of the total system need to be taken into account as it is impossible to determine from which source electricity is being supplied to which particular customer. The electricity from all sources gets combined in the system and loses its identity. As investment in the system has also been made, it was evident that requisite charges have to be paid.With respect to Grid Support Charges, it has been conceded by the learned counsel for the parties that the decision in the aforesaid batch of matters as to wheeling charges has to govern grid support charges as we have upheld the order of the Commission with respect to wheeling charges, the order of the High Court has to be set aside.Any Government Order or Incentive Scheme does not govern the Grid Support Charges. Grid Code is the basis for levy of the Grid Support Charges, which came to be approved by the Commission on 26.5.2001. The same is also reflected in the impugned order. Thus, in case of installation of another CPP, that would be an additional load on the grid, and there is no embargo for setting up additional grid CPP in the form of expansion as grid acts as cushioning. The Grid Support Charges can be levied, and the order dated 8.2.2002 of the Commission is, thus on the parity of the reasonings, has to be upheld considering the provisions of Section 21 (3) of the Reforms Act, 1998. Under section 11 read with section 26 of the Reforms Act, 1998, all fixed charges under the distribution and Grid Support Charges are leviable only at the instance of a distribution company, and because of the discussion above, the Commission has the powers to determine it. In the agreements also there is a power where the Board could have fixed the Grid Support Charge unilaterally, but because of Reforms Act, 1998 came to be enacted, the application was filed in the Commission. After that, the Commission has passed the order in accordance with the law. We find no fault in the same. Thus, the order of the Commission concerning the Grid Support Charges has to be upheld. The judgment and order of the High Court are liable to be set aside concerning wheeling charges as well as Grid Supporttariff orders were passed in the years 2004-05, 2005-06, and 2006-09 by the APERC in exercise of the power conferred under Section 62 of the Electricity Act, 2003. The appeals were preferred before the APTEL under Section 111 of the Electricity Act, 2003.The Government issued another GO MS No.112 dated 22.12.1998, making precise clarification that the benefits shall be available only to the power projects where fuel used is from non-conventional energy sources, which are of the nature of renewable sources of energy. The Scheme shall be watched for three years. After that, the State Electricity Board shall come up with suitable proposals for the continuance of incentives in the present form or modified form.The Commission had passed the tariff orders dated 22.3.2005 and 23.3.2006 for the years 2004-05, 2005-06, and 2006-09. The APTEL vide impugned judgment and order has allowed the appeals and has held that effect of the policy decisions dated 18.11.1997 and 22.12.1998, which had a statutory flavor, had not been taken away by the provisions contained in the Electricity Act, 2003. The policy has created vested rights in favour of entrepreneurs, and these vested rights could not have been taken away. The rights created by GOMS No.93 dated 18.11.1997, would continue to operate until and unless they are withdrawn in accordance with law. The Doctrine of Promissory Estoppel is attracted, though the Commission has the power to regulate wheeling charges. It needed to address the question. The Commission has lost sight of the spirit behind G.O. MS Nos.93 and 112, dated 18.11.1997 and 22.12.1998, respectively. Aggrieved by the decision of APTEL, the APTRANSCO has preferred thethe contrary, the benefit was confined only to three years. The Commission under the provisions of the Reforms Act, 1998 extended it from time to time and the last such extension came to an end on 28.7.2001. The Commission decided not to extend the benefit by the impugned order determining the tariff.This Court in Transmission Corporation of Andhra Pradesh Limited & another v. Sai Renewable Power Private Limited & others, (2011) 11 SCC 34  , has considered the abovementioned G.O. MS dated 18.11.1997 and 22.12.1998, in which APERC undertook the review of tariff applicable to the producers of electricity from non-conventional energy resources. In the year 2003, the Commission undertook a further review of the tariff. Contrary to the expectations of the producers of electricity from non-conventional energy resources, the Commission vide order dated 20.3.2004, has reduced the amount of tariffs. The producers from non-conventional energy resources challenged this order before the APTEL, which vide order dated 2.6.2006, declared the order dated 20.3.2004 of the Commission as valid. One of the grounds raised before the Tribunal was that purchase price of ?2.25 per unit was fixed based on the Central Government letter dated 7.9.1993 and Andhra Pradesh abovementioned G.O. MS. Therefore, the Commission could not back out from the promise made in these Government communications. The plea found favour with the Tribunal. The Tribunal?s order dated 2.6.2006 was challenged in the appeals, which were decided by this Court. One of the issues before this Court was whether the Commission was estopped from passing an order, which would be contrary to the provisions of the Government communications dated 7.9.1993, 18.11.1997, and 22.12.1998. The appeals were allowed by this Court, and this Court held that the Tribunal fell in error of law in concluding that Regulatory Commission had no powers either in law or otherwise of reviewing the tariff and so-called incentives. There was no unequivocal commitment to the respondent/ purchasers/ generators/ developers to bind the State for all times to come. There was no definite, unambiguous representation, hence plea of estoppel was not attracted.Concerning aforesaid Government Orders dated 18.11.1997 and 22.12.1998, this Court already held that plea of promissory estoppel is not attracted, and there was no unequivocal promise. We are of the opinion that there was no material change in the facts and circumstances of the case to attract the plea of promissory estoppel based on Government orders mentioned earlier. The Tribunal has passed an order, by which it had temporarily extended the period to 24.7.2001. In the impugned order dated 24.3.2002, the objection raised of the non-conventional energy developers regarding wheeling charges was dealt with and it was stated that non-conventional energy have to pay the wheeling charges without discrimination and it was also stated that if Government wants to pay any subsidy, it may pass fresh order to compensate the licensee. The Government has, after that, never given any subsidy, for subsidy care is taken by the statutory provision contained in the Electricity Act, 2003. Section 65 of the Electricity Act, 2003, provides that if State Government requires grant of any subsidy to any consumer in the tariff determined by the State Commission under Section 62, the State Government shall, notwithstanding, any direction which may be given under Section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person affected by the grant of subsidy in the manner the State Commission may direct. Subsidy/incentive is governed by Section 65, and the Government has not issued any such direction to continue the incentives in the form of subsidy. It was open to the Government to do so because of the order passed by the Commission, but it has not extended such benefit. No command can be given to State to grant subsidy.Thus, we find that the order of APTEL based on the Doctrine of Promissory Estoppel for continuing the benefit of Government Orders dated 18.11.1997 and 22.12.1998, cannot be said to be in accordance with the law. The order of APTEL is liable to be set-aside, and that passed by the APERC has to beBinani Zinc Limited (supra), the Court has dealt with the power of the Electricity Board and observed that tariff has to be fixed within the four corners of the statute. There is no dispute with the proposition mentioned above, but it does not help the respondents on the merits of the case concerning powers and jurisdiction of the Commission under Reforms Act, 1998.