Reliance Infrastructure Limited vs State Of Maharashtra

2 The validity of a tariff regulation framed by the Maharashtra Electricity Regulatory Commission (MERC) was questioned before the High Court of Judicature at Bombay. Bereft of jargon – both legal and scientific – the plea of the appellant is of discrimination. The discrimination, according to the appellant, lies in a statutory regulation determining the Station Heat Rate. According to the appellant, its thermal power station at Dahanu has been subjected to a more stringent norm than other comparable units. MERC, it is asserted, breached the National Tariff Policy 2006. The High Court held against the appellant both 2 on the maintainability of its writ petition under Article 226 of the Constitution and on the merits of the challenge to the validity of the statutory regulation. The case has thus travelled to this Court.

(2) In cases where operations have been much below the norms for many previous years, the initial starting point in determining the revenue requirement and the improvement trajectories should be recognised at “relaxed” levels and 5 not the “desired” levels. Suitable benchmarking studies may be conducted to establish the “desired” performance standards. Separate studies may be required for each utility to assess the capital expenditure necessary to meet the minimum service standards…” 6 In August 2009, MERC published a ‘draft approach paper’ for the purpose of enacting multi year tariff regulations for financial years 2010-11 to 2014-15. On 23 October 2009, the appellant furnished its suggestions. In 2010, MERC commissioned a report from the Central Power Research Institute (CPRI) for ascertaining achievable performance parameters for thermal power plants in Maharashtra and to suggest improvements. CPRI carried out an independent assessment in respect of the plant of the appellant (DTPS), Tata Power (Generation) – TPCG, and Maharashtra State Power Generation Company Limited (MSPGCL). According to the appellant, no recommendation was made in respect of their plant since it was performing better than the prescribed SHR. 7 In July 2010, MERC published another draft approach paper in regard to the proposed multi year tariff regulations for financial years 2011-12 to 2015-16 together with draft regulations. On 26 October 2010, the appellant made submissions on the draft approach paper. On 4 February 2011, the MERC (Multi Year Tariff) Regulations, 20113 were notified. Regulation 2(32) defines the Gross Station Heat Rate thus:

Note 2 For Generating Stations having combination of 200/210/250 MW sets and 500 MW and above sets, the normative gross Station Heat Rate shall be the weighted average station heat rate.

Note 2 For Generating Stations having combination of 200/210/250 MW sets and 300 MW and 500 MW sets, the normative gross Station Heat Rate shall be weighted average Station Heat Rate.” 4 Tariff Regulations 2015 9 Regulation 44.5 contains the SHR for the coal based thermal generating stations of MSPGCL. Regulation 44.6 specifies the SHR for TPC-G. Regulations 44.5 and 44.6 are extracted below:

15 The Appellate Tribunal for Electricity disposed of the appeal on 8 April 2015, recording that it did not survive in view of the institution of the writ proceedings before the Bombay High Court. The appellant asserts that it drew the attention of the High Court, when the writ petition was being heard, to the fact that the appeal before the Tribunal was not pending and had been disposed of. 16 The High Court by its judgment dated 18 April 2016 dismissed the writ petition. In coming to the conclusion that the petition was lacking in merit, the High Court came to the following conclusions:

While dismissing the petition, the High Court imposed costs of Rs 1 lakh on the appellant.

32 For the reasons which we have recorded in this judgment, we have come to the conclusion that regulation 44.2(d) of the MERC (Multi Year Tariff) Regulations, 2011 does not suffer from any constitutional or statutory infirmity. We have, however, furnished reasons of our own for affirming the ultimate decision of the High Court to dismiss the writ petition. We have disapproved of the view of the 33 High Court that the writ petition under Article 226 was not maintainable and accordingly set aside the direction on the imposition of costs. However, we hold that there is no infirmity in the impugned regulation and accordingly affirm the ultimate conclusion of the High Court to dismiss the writ petition under Article 226. The Civil Appeal is, accordingly, disposed of. There shall be no order as to costs.

.....................................................J [Dr Dhananjaya Y Chandrachud] .....................................................J [Hemant Gupta] New Delhi;

January 21, 2019