Tata Power Company Limited vs Reliance Energy Limited And Ors.

2. The genesis of these three appeals is a petition filed by M/s BSES Limited on 23.7.2002 before the Maharashtra Electricity Regulatory Commission (hereinafter referred to as 'MERC'), under Section 22(2)(e) and (n) of the Electricity Regulatory Commissions Act, 1998 (hereinafter referred to as 'the ERC Act'), complaining of alleged encroachment by Tata Power Company Limited (hereinafter referred to as 'TPC') within its area of supply. In the said application M/s BSES, inter alia, prayed for the following reliefs:

4. In order to appreciate the circumstances giving rise to the above dispute, it is necessary to set out some of the facts as also the terms and conditions of the licences granted to the contesting parties for distribution of electricity within Bombay city and its suburbs.

5. At the relevant time TPC was holding four licences for the aforesaid purposes, as described hereinbelow:

6. Consequent upon amalgamation of the Tata Hydro- Electric Power Supply Company Limited and the Andhra Valley Power Supply Company Limited with Tata Power, the Government of Maharashtra on 12.7.2001 transferred the said 1907 licence, 1919 licence and the 1953 licence to Tata Power and accordingly on and from 12.7.2001 Tata Power came to hold the aforesaid four licences on the basis of which it had been contended on behalf of Tata Power that it was entitled to sell, supply and distribute electricity not only to other distributing licensees, such as Reliance Energy Limited and The Bombay Electric Supply and Transport Undertaking (hereinafter referred to as the 'BEST'), but also to direct consumers of electricity.

7. As far as M/s Reliance Energy Limited, hereinafter referred to as "R.E.L.", is concerned it acquired a licence known as the Bombay Suburban Electric Licence which had initially been issued on 29.5.1926 in favour of Killick, Nixon and Company and Callender's Cable & Construction Company Limited. The said licence was assigned to the Bombay Suburban Electric Supply Limited on 13.5.1930. The Bombay Suburban Electric Supply Limited was first renamed as BSES Limited and thereafter as Reliance Energy Limited.

15. While disposing of the petition MERC also restrained TPC from offering new connections to new consumers with energy requirement below 1000 KVA on the basis of an agreement purported to have been arrived at between TPC and BSES that they would maintain the status-quo till the disposal of the petition and would not encourage any existing consumer to switch over from one to the other.

22. Accordingly, the appeal preferred by Reliance Energy Limited was allowed and the appeal preferred by Tata Power Company Limited was dismissed.

24. Appearing for TPC, learned Senior Counsel, Mr. Iqbal Chagla, submitted that of all the distribution licences granted for supply of electricity within the island city of Bombay, the first distribution licence was issued to Bombay Electric Supply and Tramways Company Limited, hereinafter referred to as the "BEST Licence", on 7.7.1905, under the provisions of the Indian Electricity Act, 1903, hereinafter referred to as "the 1903 Act". Subsequently, on 5.3.1907, the Bombay (Hydro-Electric) licence was granted to Dorabji J. Tata and Ratanji J. Tata,which is one of the four licences currently held by TPC. Mr. Chagla submitted that the purpose for which the said licence was granted is contained in Clause 6 of the licence which is relevant for arriving at a decision in these appeals. The same is accordingly reproduced hereinbelow:

29. The inclusion of the island of Salsette and an area within a circle of 8 miles in radius around Tata Power Sub-station at Kalyan necessitated a change of the First Annexures to the licenses held by Tata Power. Such change was effected on 26.2.1942 by the substitution of the First Annexure to the Tata Power Licences of 1907, 1919 and 1921 on 26.2.1942 to redefine the area of supply, namely -

Provided however that in the case of area of supply mentioned in items (2), (3) and (7) above the licensees shall not, except with the written consent of Government, given after consulting the other licensees, be entitled to supply energy to any consumer other than such licensees within their respective areas of supply.

42. Mr. Chagla then submitted that both TPC as well as REL filed MERC appeals before the High Court, but the same were dismissed as not maintainable in view of the coming into force of the Electricity Act, 2003. However, since the Appellate Tribunal for Electricity contemplated under the Act had not been set up separate writ petitions were filed, which were also withdrawn when it was brought to the notice of the High Court that the Appellate Tribunal for Electricity had since become operational. Mr. Chagla submitted that thereafter Tata Power filed Appeal No. 43 of 2005 before the Appellate Tribunal challenging MERC's order and REL filed Appeal No. 31 of 2005 against the same order. It was stated that on 22.5.2006 the order impugned in these present appeals was passed by the Appellate Tribunal allowing Appeal No. 31 of 2005 filed by REL and dismissing Appeal No. 43 of 2005 filed by Tata Power, upon holding that:

61. Mr. Venugopal also referred to the Order passed by the Industries Energy and Labour Department of the Government of Maharashtra on 7.12.1978 making further alterations in the 1907 Licence held by Tata Power whereby from 1.7.1980 Tata Power would transfer to the Maharashtra State Electricity Board its distribution rights and assets pertaining thereto as set out in Part II of the said annexure to the said licence. By virtue of such arrangement Clause 6 relating to the 'purpose of supply' was amended to bring it in parity with the amendment to the First Annexure to the 1921 Licence. Reference was also made to the commencement of discussion with the Maharashtra State Electricity Board for delimitation of the area of supply and distribution. In other words, under the licence in respect of the licensees' area of supply covered by the licence granted in favour of BSES the guiding principle would be that Tata Power would be allowed to retain such distribution rights and loads in the said area as would be warranted by the surplus generating capacity of Tata Power after meeting the requirements in the area served by BEST as well as the bulk supplied to the Maharashtra State Electricity Board at various points. According to Mr. Venugopal, such discussion was only with the object of allowing Tata Power to utilise its surplus generating capacity on account of the transfer of its customers to the Maharashtra State Electricity Board.

67. Mr. Venugopal urged that no interference was called for either with the judgment and order of MERC or that of the Appellate Tribunal and the appeal filed by the Tata Power was liable to be dismissed along with the appeals filed by MIDC, Marol Industries Association.

77. Having regard to the above and the terms and conditions of the licences held by Tata Power, we have no hesitation in holding that the Appellate Tribunal for Electricity erred in coming to a finding that under its licences Tata Power was entitled to supply energy only in bulk and not for general purposes and in retail to all consumers, irrespective of their demand, except for those consumers indicated in Sub-clause (I) of Clause 5 of the several licenses held by Tata Power.

79. The parties shall bear their own costs.