Gujarat Urja Vikas Nigam Ltd vs Essar Power Limited

3. The appellant, Gujarat Urja Vikas Nigam Ltd. (‘the GUVNL’), is the successor of the Gujarat Electricity Board and is a deemed licencee under Section 2 (39) read with Sections 12 and 14 of the Act. The respondent, ESSAR Power Limited (‘the EPL’), is a generation company within the meaning of Section 2 (28) of the Act. The appellant filed a petition before the Commission under Section 86 (i)(f) of the Act for adjudication of the dispute arising out of the Power Purchase Agreement (‘the PPA’). The appellant inter alia sought compensation for wrongful allocation of electricity by the EPL to its sister concern, Essar Steel Ltd. (ESL) in preference to the appellant.

4. According to the appellant, the EPL was required to allocate 300 MW out of the total 515 MW of electricity and the remaining 215 MW was to be allocated to ESL. In case the quantum of generation was less than 515 MW, the allocation was to be in the proportion of 300 : 215. Contrary to this requirement, the EPL allocated more electricity to ESL. The EPL agreed, vide letter dated 17.02.2000, that the appellant will be entitled to electricity in the proportion of 300 : 215 but the same was not adhered to. This resulted in loss to the appellant and gain to the EPL which, according to the appellant, tentatively worked out to Rs.476.22 crores (towards principal amount). It was further pleaded by the appellant that under the agreement, the appellant was liable to pay the annual fixed charges, the variable charges, incentive etc. in relation to the allocated capacity of 300 MW out of total 515 MW. Similarly, the ESL to whom balance capacity of 215 MW was allocated was to bear proportionate annual fixed cost, thus, the EPL was required to make electricity available to the appellant in the proportion of 300 : 215 as per clause 3 of the Agreement. The EPL was required to declare the availability in the same proportion so that the dispatch instruction could be issued as per the Agreement. The appellant pleaded that it was entitled to compensation for wrong allocation of electricity based on the applicable HT rate from time to time. The appellant claimed damages equal to the difference of rate at which electricity was to be supplied to it and the rate at which the appellant was to supply the same to its consumers. For this purpose, the respondent was liable to give true details and complete account of the allocation made to the appellant and to ESL. The appellant had also raised a claim for recovery of Deemed Generation Incentive paid to the respondent to which the respondent was not entitled but the said claim is no longer subject matter of this appeal, the order of the Tribunal in that respect having become final.

5. It will be appropriate to refer to the prayer clause in the petition filed by the appellant :-

6. The above claims were contested by the respondent based on preliminary objections including the plea of limitation as well as on merits.

9. The Commission upheld the plea of limitation raised by the respondent to the extent that the appellant was held entitled to its claims only for three years preceding the filing of the petition, i.e., from 14th September, 2002, the petition having been filed on 14th September, 2005. The Tribunal upheld the said finding. Though the appellant had filed Civil Appeal No.3454 of 2010 on this aspect, the said appeal was dismissed by this Court vide order dated 2nd September, 2011 as follows :

13. The respondent preferred an appeal before the Tribunal being Appeal No.86 of 2009. Contention of the appellant was that the EPL was not obliged to declare electricity availability in ratio of 300 : 215 MW to the appellant. The PPA signed with the appellant and the sister concern of the EPL were independent. The obligation to supply was to arise after receiving dispatch instructions only.

9.7 In view of the aforesaid, the Commission accepts the submission made by GUVNL to the effect that, if in a time block the declared availability for the station with 515 MW of the installed capacity in only 400 MW, the same should be declared available to GUVNL to the extent of 233 MW and to Essar Group to the extent of 167 MW, maintaining the proportion of 58% : 42% (300:215). It is not valid for EPL to declare available in any time block to Essar Group to the extent of 215 MW towards their share and declare available to GUVNL 185 MW. Such an act would mean that Essar Group is being preferred at the cost of GUVNL. As against the GUVNL’s entitlement of 233 MW they will get only 185 MW and therefore a deficit of 48 MW equivalent of electricity. That certainly cannot be the intention of the parties.

81. In the light of the above position, the direction given by the State Commission with reference to reimbursement of Annual Fixed Charges to the Electricity Board when the Electricity Board has not secured energy to the extent allocated under the proportionate principle is not correct as the same is misconceived. In this case we are of the view that the Annual Fixed Charges are not refundable for the surrendered portion of the electricity to the person in whose favour such electricity is surrendered. Hence, in regard to the issue relating to the liability to pay compensation we hold that, in Electricity Board is not entitled to get the compensation as claimed and as such the Appellant EPL succeeds in this issue. Consequently the findings given by the State Commission on this issue are set aside. “ Part VI : Rival Submissions

Part VIII : Decision on above points and reasons therefor Re : (i) :

Natural.” 3.2 Delivery of Active Energy The Company shall deliver Active Energy and Reactive Energy to the Board at the Delivery Point in accordance with Dispatch Instructions issued by the Board under the Dispatch procedures as specified in Schedule VI. All Active Energy delivered by the Company shall have at the Delivery Point, the voltage, frequency and the other electrical parameters associated with active/reactive power as may be decided by the Board in accordance with the Operating Characteristics.

3.3 Availability Declarations From the date of Entry into Commercial Service of the first Unit the Company shall, submit to the Board from time to time, Declared Available Generation Capacity as per the procedures set forth in Schedule VI.

xxx Schedule VI 6.1 Submission of Weekly Schedules The Company will submit to the Board’s Load Dispatch Centre at Jambua, Baroda weekly schedules indicating the times and Capacity which will be available from Generating Station and if not available and reasons therefor. These weekly schedules will be submitted on or before each Friday for the next week starting from Monday. If at any time after the issue of such schedule, there is any change in circumstances, the Company will notify the Board about the revisions necessary in the weekly schedule and the reasons therefor.

6.2 Issuance of Requirement Schedule The Board shall issue to the Company’s Generating Station at Hazira a Schedule of its requirement with respect to the generation of the Allocated Capacity by the Generating Station during each day by 5.00 PM on the preceding day. This schedule will indicate the level of Active Power required to be produced by Generating Station.

6.4 Operation of Generating Station The Company, subject to the provisions contained in Article 3.3 of this Agreement, shall operate Generating Station in accordance with the relevant Dispatch Instructions given by the Board from time to time provided that the Company shall not be obliged to comply with such instructions to the extent that it would require the Company to operate the Generating Station otherwise than the Dynamic Parameters applicable from time to time.

Re : (iii) :

Re : (iv) :

28. Accordingly, we allow this appeal, set aside the order of the Tribunal and restore that of the Commission.

An Epilogue

29. Before we part with this judgment, it appears to be necessary to draw attention of all concerned to a vital issue of composition and functioning of Tribunals and statutory framework thereof especially its impact on working of this Court and in turn on the rule of law.

34. It may also be noted that in some Tribunals (For example, the tribunal constituted under the Telecom Regulatory Authority of India Act, 1997), the Tribunal exercises original jurisdiction to the exclusion of all courts and is located only at Delhi[8]. It may further be noted that normally tenure of office of the Chairman and members is of short duration of three to five years. Access to justice may not be, thus, available with the convenience with which it is available when jurisdiction is with the local civil courts sought to be substituted. Such provisions may need review in larger public interest and for providing access to justice.

41. We are thus of the view that in the first instance the Law Commission may look into the matter with the involvement of all the stakeholders.

43. The questions which may be required to be examined by the Law Commission are :

44. We request the Law Commission to give its report as far as possible within one year. Thereafter the matter may be examined by concerned authorities.

45. Action taken by the Central Government, after its consideration, may be placed on record. List the matter in November, 2017 before an appropriate Bench, preferably of three Judges to consider the above issue.

AUGUST 09, 2016.

Date : 09/08/2016 This appeal was called on for pronouncement of JUDGMENT today.

For Appellant(s) Ms. Hemantika Wahi,Adv.

Ms. Puja Singh, Adv.

Mr. Shubham Arya, Adv.

Hon'ble Mr. Justice Adarsh Kumar Goel pronounced the judgment of the Bench comprising Hon'ble Mr. Justice Anil R. Dave and His Lordship.

The appeal is allowed in terms of the signed Reportable Judgment inter alia with following observations.

“We are thus of the view that in the first instance the Law Commission may look into the matter with the involvement of all the stakeholders.

The questions which may be required to be examined by the Law Commission are :