T.N.Generation & Distbn. Corpn Ltd vs Ppn Power Gen.Co.Pvt.Ltd

2. The respondent, a generating company, has entered into a Power Purchase Agreement (PPA) with the appellant on 3rd January, 1997 for the supply of the entire Electricity to be generated by the respondent for a period of 30 years. The respondent commenced commercial operations on 26th April, 2001. Under the PPA, the respondent has to submit an annual invoice indicating the amounts owed under the Tariff. The amounts receivable from the appellant for the previous year are to be reconciled against the sum of monthly estimated payment made by the appellant as soon as possible after the end of each year. Accordingly, respondent started raising monthly invoices from 26th April, 2001 for the Electricity supplied by it to the appellant. According to the appellant, invoices of the respondent inter alia included interest on debt sanctioned but not disbursed, charges towards energy consumed at the residential quarters at the generating station etc. The appellant claims that substantial payments towards the monthly invoices raised by the Respondent for every month were paid against the admitted amount in the invoice. The disputed amount was withheld. The respondent accepted the admitted amount paid against each invoice without raising any dispute either with respect to the disputed amount or the substantial payment made by the appellant.

3. Government of India by Notification dated 30th March, 1992 incorporated a rebate scheme on the receivables. Under this scheme, the purchaser, i.e., appellant is entitled to a rebate @ 2.5% if the payment is released within 5 days from the date of invoice and @ 1% if the payment is released within 30 days from the date of invoice. Accordingly, while making the payment of the admitted amount under each invoice, the appellant deducted the 2.5% rebate, as payments were made within 5 days from the date of the receipt of the invoice. These payments were accepted by the appellants. On the other hand, respondent adjusted the amount received by it in the following month against the unpaid amount of the previous month. The balance was carried forward by the respondent. Since June, 2001, the appellant had been making payments as noticed above, and the respondent had been adjusting the same on a “FIFO” basis. The appellant claims that the monthly invoices raised by the respondent were only estimated invoices. On the other hand, the respondent claims that the appellant, from inception only made adhoc payments periodically against the monthly invoices raised. Therefore, each side is claiming that the other did not provide any details with regard to the amounts due and the amounts paid. It is also the claim of the respondent that the appellant had unilaterally made several disallowances without informing the respondent of the same.

4. It appears that both the parties were dissatisfied with accounting details provided by the other. Ultimately, the respondent issued a notice of dispute resolution on 26th April, 2007 and appointed its Vice President, Shri B. Sundaramurthy as the representative. Continuous correspondence was exchanged between the parties from August, 2007 to March, 2009. On 1st April, 2009, respondent sent a Notice to the appellant in terms of Article 16 of the PPA claiming amounts due/overdue from the appellant and interest on late payments. The Notice gives a summary of claims of the respondent till 30th March, 2009 other than towards specified taxes, which was stated to be subjudice, and, therefore, not included therein. The balance of amount payable, according to the respondent was Rs.1,787,272,534. The appellant in reply informed the respondent on 16th April, 2009 that the matter was under scrutiny and examination. Since, there was no response, the respondent sent a reminder. Instead of making the payment of the amounts claimed, the appellant issued letter dated 4/5th May, 2009 claiming that according to its accounts, sum of Rs.31.12 crores was due to the appellant. On 8th May, 2009, the respondent requested the appellant “to provide the particulars and details forming the basis of your claim before 15th May, 2009.” The respondent also requested the appellant to fix a meeting on or before 19th May, 2009 to discuss the issues and resolve the same. A meeting took place on 19th May, 2009 but the dispute was not resolved.

10. Upon completion of the pleadings and after hearing the parties, the State Commission by an order dated 17th June, 2011, allowed the petition filed by the respondent for refund of the excess rebate availed by the appellant contrary to the terms of PPA and also ordered the respondent to redraw the monthly invoices in accordance with the directions issued by the State Commission. The State Commission held that it is competent to adjudicate upon the dispute. The limitation period prescribed in the Limitation Act, 1963 would not apply to the proceeding before the Commission, delay and laches would apply. The appellant is liable to pay interest to the respondent in terms of Clause 10.6 of the PPA till payment. Conversely, if the appellant has made excess payment against each monthly invoice compared to the corresponding redrawn monthly invoice, the respondent is liable to pay interest in terms of Article 10.6 of the PPA. The rebate would be admissible to the appellant, if the redrawn monthly invoice and the original payment made by the appellant against the invoice of that month matches or if the appellant has made excess payment, the respondents were directed to redraw the annual invoice for 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006 and 2006-2007, as at September of each year to capture the gains to the appellant on account of lower interest rates and gains to the respondent on account of higher floating rate. Certain other directions were also issued. The petition was accordingly disposed of.

24. It is further submitted by Mr. Nariman that the respondents have failed to file annual invoices at the end of each year for the years 2001-2006. The invoices for these years were filed only on 18th July, 2007. This is in breach of Clause 10.2(b)(ii) of the PPA which required the respondents to submit annual invoices setting of the details of the amounts owed under the tariff and reconciliation of the actual amounts receivable from the appellant for the prior year against the sum of monthly estimated payments made by the appellant. Similarly, if payments are due by the respondent to the appellant, the stated amount has to be paid to the appellant and vice versa. The State Commission rejected the explanation given by the respondent for failure to submit the annual invoices, but instead of dismissing the claim of the respondents, a direction has been made to redraw the annual invoices of each year as on 30th September of each year. Mr. Nariman further points out that the respondent, upon redrawal of the invoices, had agreed to refund/adjust a sum of Rs.45 crores, being the excess amount charged by the respondent from the appellant. The said amount has not been paid till date.

25. Mr. Nariman points out that the only dispute between the parties in the present litigation is only with regard to the question as to whether the appellant was entitled to avail rebate of 2.5 % on the part payment of the monthly invoice within 5 business days from the date of the presentation of the monthly invoice. It is submitted that in the initial petition filed by the State Commission it was not the claim of the respondent that the appellant wrongly availed rebate of 2.5%. There were no pleadings to that effect. Therefore, the findings and conclusions of the State Commission are liable to be set aside. Mr. Nariman submits that if one reads the PPA as a whole, it would become apparent that the payment of the full invoice amount within 5 days of the date of raising of invoice is not a pre-condition for seeking a rebate of 2.5% of the invoice amount. Clause 10.2(a) does not make it a pre-condition for payment of the full amount of invoice within 5 business days in order to avail the rebate of 2.5%. Clause 10.2(b)(i) indicates that the full amount is to be paid on the due date of an invoice. Due date is defined in Article 10.2 (a) as 30 days from the date of handing over of the invoice. Mr. Nariman then submits that a conjoint reading of these clauses would show that in order to be eligible for a rebate, at the rate of 2.5%, the payment has to be made on the 30th day of the presentation of the invoice. Therefore, any payment made within 5 business days entitled the appellant to claim 2.5% rebate on such payment. It is further submitted by Mr. Nariman that rebate is nothing but refund of a part of the interest loaded upfront on the Working Capital. The estimated monthly tariff invoice has two components – (i) the fixed capacity charges (FCC) and (ii) variable fuel charges (VFC). The rebate of 2.5 % is allowed in view of the notification dated 30th March, 1992 issued by the Ministry of Power, Government of India, in exercise of powers under sub-section (2) of Section 43 of the Electricity Supply Act, 1948. The aforesaid notification has been made part of the PPA as Schedule U thereof. Schedule A of the PPA deals with Tariff. Interest on the receivable equivalent to 2 months’ average billing for sale of electricity is loaded upfront on the monthly invoice. Part of this is refunded by way of rebate of 2.5 % if payment is made within 5 days and at 1% if it is made after 5 days but upto the 29th day from the presentation of the monthly invoice. Interest of the respondent upto the 30th day loaded upfront in the invoice. Thereafter the interest of the respondent is protected from the due date till payment is made in accordance with the Clause 10.6(e) of the PPA. Therefore, the appellant is entitled to rebate if payment is made within 5 days or within 29th day of the presentation of the invoice. Lastly, it is submitted by Mr. Nariman that the appellant has been made the payment within 5 days only to avail rebate of 2.5%. One such payment was made, the respondent had the use of money for a period of 25 days and correspondingly the appellant had been deprived of the use of such money for a period of 25 days every month. He submits that absent the contract between the parties, the appellant would have made the payment only on the 30th day and not within 5 days. In any event, 60 days of interest on the Working Capital had already been loaded upfront. Only 30 days interest was being returned in the form of rebate on the amount paid by the appellant within 5 days. In order to make the payment within 5 days, the appellant often had to avail the loan. Out of Rs.240 crores, which the appellant has already paid to the respondent under the Orders of the State Commission, almost Rs.235 crores is rebate. The respondent is now claiming more than Rs.500 crores towards interest at compound rate on Rs. 240 crores paid by the appellant, contrary to the provisions of the PPA. On the basis of the above, he submits that allowing the claim of the respondent for refund of the rebate amount would amount to unjust enrichment. Further, the award of interest on the aforesaid amount of rebate would amounts to double unjust enrichment.

31. During the course of hearing, the appellant had taken out I.A. No. 5 of 2013 and I.A. No. 6 of 2013. I.A. No. 6 is for the impleadment and I.A. No. 5 is for the direction.

I.A. Nos. 5 and 6 of 2013

45. Keeping in view the aforesaid observations of this Court, in our opinion, the State of Tamil Nadu ought to make necessary appointments in terms of Section 84(2) of the Act. We have been informed that till date no judicial Member has been appointed in the Tamil Nadu State Commission. We are of the opinion that the matter needs to be considered, with some urgency, by the appropriate State authorities about the desirability and feasibility for making appointments, of any person, as the Chairperson from amongst persons who is, or has been, a Judge of a High Court.

I.A.No.5 of 2013 seeks direction to IOCL to furnish details of all the documents of the matter. Further directions are also sought on the respondent to refund a sum of Rs.240 crores paid by the appellant under the order passed by the State Commission along with interest at the rate as mentioned in PPA.

59. The respondents in a common counter statement to the applications have submitted that the applications are not maintainable. The applications have been evidently preferred purely as dilatory tactics, to delay and deny substantial payments that are due and payable to the respondent pursuant to the orders passed by the State Commission which have been upheld by APTEL. We are not inclined to entertain either of the applications at this stage. The issue sought to be raised in both the applications ought to have been raised by the appellant at the relevant time. The applications are, therefore, accordingly dismissed.

60. For the foregoing reasons, we see no merit in the appeal and the same is accordingly dismissed.