Gujarat Urja Vikash Nigam Ltd vs Essar Power Ltd

4. The appellant-company is engaged in the business of generation of electrical energy. The appellant-company has its generation station at Hazira, Surat. On 30th May, 1996 the appellant-company entered into a power purchase agreement (hereinafter in short "the aforesaid agreement") with the Gujarat Electricity Board. Under the aforesaid agreement the parties agreed, inter alia, that out of the total generating capacity of 515MW electricity the appellant-company would allocate 300MW electricity to the Board and 215MW electricity to the Essar Group of Companies. Under Clause 11 of the agreement the parties agreed that in the event any dispute arose the same may be resolved by the parties by mutual agreement as envisaged by Clause 11(1) of the aforesaid agreement. In the event of failure to resolve the dispute by amicable settlement, the parties agreed that such dispute be submitted to arbitration vide Clause 11(2).

5. In the meantime, under the Gujarat Electricity Industry (Reorganization and Regulation) Act, 2003 published in the Gujarat Government Gazette on 12th May, 2003 the assets and liabilities of the Board were transferred to the appellant Nigam.

6. It appears that certain disputes had arisen between the parties mainly in connection with the allocation of power to the Essar Group of Companies. It is not in dispute that the respondent-company did not utilize its total generating capacity to generate 515MW electricity. It also did not supply 300MW electricity to the Board as agreed. According to the Board, in the event of the respondent-company generating less than its total generating capacity of 515MW electricity under the aforesaid agreement, the respondent-company was required to maintain a ratio of 300MW:215MW in allocation of electrical energy to the Board and the Essar Group of Companies respectively. The respondent-company, allegedly, did not maintain the said ratio, and supplied more electricity to the Essar Group than in accordance with the ratio of 300MW:215MW.

7. The respondent-company and the Board tried to settle the above dispute amicably. The State Government also intervened in the matter but to no avail. After protracted correspondence, on 14th November, 2005 the respondent-company called upon the appellant-Nigam to refer the disputes arising from the aforesaid agreement to the arbitrator Mr. Justice A.M. Ahmadi, retired Chief Justice of India. On the other hand, the Nigam approached the Gujarat Electricity Regulatory Commission, Ahmedabad (hereinafter in short "the Commission") by Application No.873 of 2005 made under Section 86(1)(f) of the Electricity Act, 2003 (hereinafter in short "the Act of 2003").

21. It appears that the respondent Essar Power limited was obliged under its agreement with the Gujarat Electricity Board to supply power to the Board and the Essar Steel Limited in the ratio of 300MW:215MW. The grievance of the Board (now the Nigam) was that the Essar Power Limited has diverted energy which was to be supplied to the Board to the Essar Steel Limited. Hence the Board vide its letter dated 29.10.2003 raised a demand of Rs.537 crores upon Essar Power Limited for diverting the said energy. On the other hand, Essar Power Limited disputed the said claim by its reply dated 1.11.2003 and stated that the Board had not honoured its commitment under the agreement regarding payment to it. The Board, thereafter, raised further claims against Essar Power Limited.

(2) The second situation is a conflict where it is impossible to reconcile the two conflicting texts despite all efforts. In this situation the Vikalpa principle applies, which says that whichever law is more in consonance with reason and justice should be preferred. However, conflict should not be readily assumed and every effort should be made to reconcile conflicting texts. It is only when all efforts of reconciliation fail that the Vikalpa principle is to be resorted to.

(emphasis supplied)

46. There are other instances in which the inconsistency arises incidentally. For example, in the Sadyaska there is no need of cutting the peg with which the animal is to be tied. But, in the Agni-Somiya Yagya which is the Prakriti of the Sadyaska Yagya, reciting of certain Mantras is prescribed in connection with the cutting of the peg. This recital being out of place in the former Yagya is barred in carrying the Atidesha process. Numerous other illustrations can be given. For example, in the Satra Yagya the selection of Rittik is out of place and so omitted, though this is done in the Soma Yagya of which the Satra is the Vikriti. The Krishnala Nyaya (black bean maxim) is another instance. In cases where Atidesha is to be made by implication, it is altogether barred, if there is an express text against making the implication.

48. One of the Mimansa principles is the Gunapradhan Axiom, and since we are utilizing it in this judgment (apart from the badha and samanjasya principles) we may describe it in some detail.

According to Jaimini, acts are of two kind, principal and subordinate (see Jaimini 2 : 1 : 6).

Commenting on Jaimini 3 : 3 : 9 Kumarila Bhatta says :

61. Since the High Court has appointed an arbitrator for deciding the dispute between the licensee and the generating company, in our opinion, the judgment of the High Court has to be set aside. Only the State Commission or the arbitrator (or arbitrators) appointed by it could resolve such a dispute. We, therefore, set aside the impugned judgment of the High Court but leave it open to the State Commission or the Arbitrator (or Arbitrators) nominated by it to adjudicate/arbitrate the dispute between the parties expeditiously. Appeal allowed. The impugned judgment set aside.

62. Case No.873 of 2005 filed by the appellant under Section 86(1)(f) of the Electricity Act, 2003 before the Gujarat Electricity Regulatory Commission, is still pending. Since the matter is pending from 2005, we direct the Gujarat Electricity Regulatory Commission to dispose of the petition as expeditiously as possible preferably within six months.

C.A. No........../2008 [Arising out of S.L.P(C) No.675/2007]

63. This appeal is filed regarding the deduction of Rs.5 crores. The appellant may file application under Section 94(2) of the Electricity Act, 2003 before the appropriate Commission, to pass such an interim order, as may consider appropriate. This appeal is, accordingly, dismissed.