Case: Gujarat Urja Vikas Nigam Limited Vs. Tarini Infrastructure Ltd

the power to enhance the rate of dead rent cannot be so exercised as to affect subsisting leases and that unless this construction were placed upon sub-section (1), the power conferred by that sub-section would be bad in law as being an arbitrary power. It was submitted that a mining lease is the result of a contract entered into between two parties and dead rent is part of the consideration for the grant of the lease, and just as in the case of a contract of sale of goods, it cannot be left to the sweet will of the seller to charge what price he liked, in the same way in the case of leases and concessions granted under Section 15(1), it cannot be left to the State Governments to amend the rules so as to charge whatever dead rent they like and whenever they like during the subsistence of the lease. We find no substance in either of these submissions. A quarry lease, mining lease or other mineral concession in respect of a minor mineral does not stand on the same footing as an ordinary contract. These leases and concessions are granted by the State Governments pursuant to rules made under the statutory power conferred upon them by a regulatory Act. Minerals are part of the material resources which constitute a nations natural wealth and if the nation is to advance industrially and if its economy is to be benefited by the proper development and exploitation of these resources, they cannot be permitted to be frittered away and exhausted within a few years by indiscriminate exploitation without any regard to public and national interest. The same view was expressed by the Court in State of Tamil Nadu v. Hind Stone. ............ ............ ............ The presumption is that an authority clothed with a statutory power will exercise such power reasonably, and if in the public interest and for the efficacious regulation of mines and quarries of minor minerals and the proper development of such minerals, a State Government as the delegate of the Union Government thinks fit to amend the rules so as to enhance the rate of dead rent, it cannot be said that it is prevented from doing so by the principles of the ordinary law of contracts. It may be that in certain cases by enhancing the rate of dead rent the holders of leases in respect of certain types of minor minerals may be adversely affected but private interest cannot be permitted to override public interest. Conservation of minerals and their proper exploitation result in securing the maximum benefit to the community and it is open to the State Governments to enhance the rate of dead rent so as to ensure the proper conservation and development of minor minerals even though it may affect a lessees liability under a subsisting lease." 17. A similar view expressed in Shree Sidhbali Steels Ltd. and Others v. State of Uttar Pradesh and Others, (2011) 3 SCC 193 may also be noticed. "41.By virtue of Sections 14 and 21 of the General Clauses Act, when a power is conferred on an authority to do a particular act, such power can be exercised from time to time and carries with it the power to withdraw, modify, amend or cancel the notifications earlier issued, to be exercised in the like manner and subject to like conditions, if any, attached with the exercise of the power. It would be too narrow a view to accept that chargeability once fixed cannot be altered. Since the charging provision in the Electricity (Supply) Act, 1948 is subject to the State Governments power to issue notification under Section 49 of the Act granting rebate, the State Government, in view of Section 21 of the General Clauses Act, can always withdraw, rescind, add to or modify an exemption notification. No industry can claim as of right that the Government should exercise its power under Section 49 and offer rebate and it is for the Government to decide whether the conditions are such that rebate should be granted or not." 18. Before parting, a word about the recent pronouncements of this Court in Gujarat Urja Vikas Nigam Limited v. EMCO Ltd. & Anr. (supra) and Bangalore Electricity Supply Co. v. Konark Power Projects Ltd. (supra), relied upon by the appellant. All that would be necessary to note in this regard is the context in which the bar of a review of the terms of a PPA was found by this Court in the above cases. In Gujarat Urja Vikas Nigam Limited v. EMCO Ltd. & Anr. (supra) the power purchaser sought the benefit of a second tariff order made effective to projects commissioned after 29.01.2012 (the power purchaser had commissioned its project on 02.03.2012) though under the PPA it was to be governed by the first tariff order of January, 2010. Under the first tariff order for such projects which were not commissioned on or before the date fixed under the said order, namely, 31.11.2011 the tariff payable was to be determined by the Gujarat Electricity Regulatory Commission. The power producer in the above case did not seek determination of a separate tariff but what was sought was a declaration that the second tariff order dated 27.01.2012 applicable to PPA(s) after 29.01.2012 would be applicable. It is in this context that this Court had taken the view that the power producer would not be relieved of its contractual obligations under the PPA. In the case of Bangalore Electricity Supply Co. v. Konark Power Projects Ltd. (supra), this Court held that it was beyond the power of State Commission to vary the tariff fixed under the approved PPA in view of the specific provisions in Regulations 5.1 and 9 of the KERC(Power Procurement from Renewable Sources by Distribution Licensee) Regulations, 2004 and 2011 respectively as the same specifically excluded a PPA concluded prior to the date of notification of the Regulations in question. 19. In view of the above, the

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In view ofSection 86(1) (b) the Court must lean in favour of flexibility and not read inviolability in terms of the PPA insofar as the tariff stipulated therein as approved by the Commission is concerned. It would be a sound principle of interpretation to confer such a power if public interest dictated by the surrounding events and circumstances require a review of the tariff. The facts of the present case, as elaborately noted at the threshold of the present opinion, would suggest that the Court must lean in favour of such a view also having due regard to the provisions of Sections 14 and 21 of the General Clauses Act, 1898.the first tariff order for such projects which were not commissioned on or before the date fixed under the said order, namely, 31.11.2011 the tariff payable was to be determined by the Gujarat Electricity Regulatory Commission. The power producer in the above case did not seek determination of a separate tariff but what was sought was a declaration that the second tariff order dated 27.01.2012 applicable to PPA(s) after 29.01.2012 would be applicable. It is in this context that this Court had taken the view that the power producer would not be relieved of its contractual obligations under the PPA.