2015 (11) TMI 1287 - SC - Indian Laws

Supreme Court Upholds APTEL & State Commission Decisions on Payment Dispute

T.N. Generation & Distbn. Corpn. Ltd. Versus PPN power Gen. Co. Pvt. Ltd.

T.N. Generation & Distbn. Corpn. Ltd. Versus PPN power Gen. Co. Pvt. Ltd. - 2014 (4) SCR 667, 2014 (11) SCC 53, 2014 (4) JT 613, 2014 (4) SCALE 560 Issues Involved:1. Entitlement of the Appellant to Rebate.2. Jurisdiction of the State Commission under Section 86(1)(f) of the Electricity Act, 2003.3. First in First Out (FIFO) method for adjustment of payment.4. Limitation, delay, and laches.5. Bar under Order 2 Rule 2 CPC.6. Non-filing of Annual Invoices.7. Determination of capital cost.8. Deduction on the monthly invoices.9. Excess claims in the monthly invoice - unjust enrichment.10. Interest on Late Payments.Issue-wise Detailed Analysis:1. Entitlement of the Appellant to Rebate:APTEL held that under Article 10.2(a), 10.2(b)(i), and 10.2(e) of the PPA, the appellant is obliged to pay the full amount of the invoice within the due date to be eligible for the rebate of 2.5% or 1%. The appellant neither paid the full amount for every invoice nor raised the dispute within one year, making it ineligible for rebate.2. Jurisdiction of the State Commission under Section 86(1)(f):APTEL, relying on the judgment in Gujarat Urja Vikas Nigam Ltd. Vs. Essar Power Ltd., held that the State Commission has the discretion to decide whether the dispute should be adjudicated by itself or referred to an arbitrator. The appellant cannot dictate that the State Commission ought to have referred the dispute to arbitration. The State Commission can adjudicate all disputes, including money claims between Licensees and Generating Companies.3. FIFO Method for Adjustment of Payment:APTEL approved the decision of the State Commission that the respondent was justified in adopting the FIFO method for adjusting payments, in accordance with Section 60 of the Indian Contract Act, 1872.4. Limitation, Delay, and Laches:APTEL held that the Limitation Act would not apply to proceedings under the Electricity Act. Sections 60 and 61 of the Indian Contract Act permit the creditor to adjust the amount on a FIFO basis. The bar under Order 2 Rule 2 of the CPC was not applicable in this case.5. Bar under Order 2 Rule 2 CPC:APTEL held that the bar under Order 2 Rule 2 of the CPC would not be applicable in the facts of this case.6. Non-filing of Annual Invoices:APTEL affirmed the State Commission's direction to the respondent to redraw the annual invoices, acknowledging that the respondent should have filed the annual invoices in time.7. Determination of Capital Cost:APTEL approved the findings of the State Commission that the appellant had adopted delaying tactics by not cooperating in the finalization of the capital costs.8. Deduction on the Monthly Invoices:The issue was resolved as the respondent gave up the claim on account of capital costs incurred on Gas Boosting Station and Conditioning System, and the Power Company was directed to redraw the monthly invoices.9. Excess Claims in the Monthly Invoice - Unjust Enrichment:APTEL found that the respondent company is entitled to interest on late payment of dues under the provisions of the PPA.10. Interest on Late Payments:APTEL held that the respondent company is entitled to interest on late payment of dues under the provisions of the PPA.Conclusion:The Supreme Court upheld the findings of the APTEL and the State Commission. The appeal was dismissed, affirming that the appellant was not entitled to a rebate due to non-payment of full invoice amounts and that the State Commission had jurisdiction to adjudicate the disputes. The FIFO method for payment adjustment was justified, and the Limitation Act did not apply to the proceedings. The appellant's claims regarding the non-filing of annual invoices, determination of capital costs, and interest on late payments were also dismissed. The applications for impleadment and directions were rejected as dilatory tactics.