TaxTMI 
TaxTMI 
2017 (10) TMI 1533
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....e Act deals with tariff. Sections 61, 62 and 64 of the Act are of particular relevance. :- "61. Tariff regulations.-The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; (b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles; (c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments; (d) safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in a reasonable manner; (e) the principles rewarding efficiency in performance; (f) multi-year tariff principles; (g) that the tariff progressively reflects the cost of supply of electricity and also reduces cross-subsidies in the manner specified by the Appropriate Commission; (h) the ....
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....r, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified. (5) The Commission may require a licensee or agenerating company to comply with such procedure as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover. (6) If any licensee or a generating company recoversa price or charge exceeding the tariff determined under this section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee. xxx xxx xxx 64. Procedure for tariff order.- (1) An application for determination of tariff under section 62 shall be made by a generating company or licensee in such manner and accompanied by such fee, as may be determined by regulations. (2) Every applicant shall publish the application, in such abridged form and manner, as may be specified by the Appropriate Commission. (3) The Appropriate Commission shall, within onehundred and twenty days from receipt of an applicat....
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....y of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers; (b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State; (c) facilitate intra-State transmission and wheeling of electricity; (d) issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State; (e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee; (f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for ar....
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....ivil court. To quote :- "95. Proceedings before Commission.- All proceedings before the Appropriate Commission shall be deemed to be judicial proceedings within the meaning of Sections 193 and 228 of the Indian Penal Code (45 of 1860) and Appropriate Commission shall be deemed to be a civil court for the purposes of Sections 345 and 346 of the Code of Criminal Procedure, 1973 (2 of 1974)." 8. Section 181 of the Act provides for the power of the State Commission to make regulations. To the extent relevant, the Section reads as follows: "181. Powers of State Commissions to make regulations.- (1) The State Commissions may, by notification, make regulations consistent with this Act and the rules generally to carry out the provisions of this Act. (2) In particular and without prejudice to the generality of the power contained in subsection (1), such regulations may provide for all or any of the following matters, namely:- xxx xxx xxx (zl) rules of procedure for transaction of business under sub-section (1) of section 92;" xxx xxx xxx (zp) any other matter which is to be, or may be, specified." (Emphasis Supplied)....
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....ed on or before 31 st December 2011. In case, commissioning of Solar Power Project is delayed beyond 31 st December 2011, GUVNL shall pay the tariff as determined by Hon'ble GERC for Solar Projects effective on the date of commissioning of solar power project or above mentioned tariff, which ever is lower ." (Emphasis Supplied) The tariff order dated 29.01.2010 is in exercise of powers under Sections 61(h), 62(1)(a), 86(1)(e) and all other powers enabling it in this behalf. 12. Article 8 of the PPA pertains to force majeure events. It provides for events which constitute force majeure: "ARTICLE 8 FORCE MAJEURE 8.1 Force Majeure Events (a) Neither Party shall be responsible or liable for or deemed in breach hereof because of any delay or failure in the performance of its obligations hereunder (except for obligations to pay money due prior to occurrence of Force Majeure events under this Agreement) or failure to meet milestone dates due to any event or circumstance (a "Force Majeure Event") beyond the reasonable control of the Party experiencing such delay or failure, including the occurrence of any the following: (i) acts of God; ....
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....60 acres of Land required for the commissioning of first two phases of 5 MW at Shivlakha Village, Tal-Bhachau, Dist.Kutch and enclosing herewith the details and copies of the documents of the Land procurement. We have (sic) also made advance Payments for another 105 acres in the same Location and will be completing the Land Registration before the end of this month. xxx xxx xxx d) We have already informed the details of Land procurement to GETCO for the necessary survey and commencement of power evacuation process. Hence we kindly request you to amend the PPA with respect to the change of Location. We hereby submit the Copies of the documents as proof of Land Procurement..." 14. A Supplemental Power Purchase Agreement (hereinafter referred to as "the SPPA") was entered into by the parties on 10.05.2011. Clauses 2.3 and 2.4 of the SPPA read as follows :- "2.3. Since M/s. SSCPCIPL have changed the location of the Solar Power Project after lapse of significant time, non-availability of Transmission system shall not be considered as a ground for non-levy of Liquidated Damages. M/s. SSCPCIPL shall pay Liquidated Damages even in case of non-availability of transmi....
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....ve consciously agreed to this provision by signing the PPA. The Commission has already circulated on 1 November 2011 a discussion paper for determining tariff for Solar Projects for the second control period which is to start from 29 January 2012. The tariff suggested is lower than the current tariff. The petitioners have sought extension of the control period in order to prevent the application of a lower tariff in the event of not being able to commission the projects within the stipulated period. The reasons given by them are project specific. The situations of various projects are widely different. In some cases, the projects are at an advanced stage. In some other cases the projects are at an initial stage, and in some cases, even the order for equipment is yet to be issued. Some of them have asked for one month and some others have asked as long as six months. The petitioners have not been able to show that there has been a problem which is industry-wide and spread over the whole State or a major part of the State, necessitating an extension of the control period. On the other hand, a number of projects have been commissioned or are likely to be commissioned within the contro....
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....phs-24 to 27. "24. The reasoning of the Commission that extending the control period would mean amendment of the Tariff Order is not at all possible to concede to. The Commission, it will be noticed from the impugned order, was conscious that individual petitions referred to individual project specific problems and issues and some prayed for one month extension, while some prayed for six months extension. The Commission came to the conclusion that unless there would happen a state-wide and large scale ramifications then only there could be a case for issue of a general order to extend the control period. Yet, the Commission said at the same breath that it has inherent power to extend the control period and it was made available when GETCO was at default. The basic premise that unless there is wide and large scale ramifications across the State in respect of the renewable sources of energy there cannot be extension of control period by general order is, to say the least, not a legal approach and such an approach would defeat the very spirit of the law. The GUVNL and the Govt. of Gujarat accepted the proposition that inherent power can be exercised to a genuine problem. In p....
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....erent power depends upon consideration of specific facts. 25. The argument of the GUVNL and for that matter of the Commission that extension of control period would be prejudicial to the PPA is again not acceptable. Firstly, PPA is not subordinate to the Tariff Order although it is based on that. The provision in the PPA that unless projects are commissioned within the specified period tariff as per the Tariff Order dated 29.1.2010 would not be available does not conflict with exercise of inherent power. If situations having wide scale ramifications warrant exercise of inherent power for extension of control period then also a certain PPA may have some consequences. Liquidated damages are available to the GUVNL only when defaults occur on the part of the developer; but when a situation is seen where circumstances regardless of whether wide scale ramifications across the State happen or do not happen went beyond the control of a developer then exercise of the inherent power which the Commission does have in their statute may be exercised but each case has to be decided on its own merit. The existence of force-majeure condition definitely comes within the framework of the Po....
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.... follows: "We have heard the learned counsel for the parties. We are not inclined to interfere with the order passed by the Appellate Tribunal for Electricity. The civil appeals are, accordingly, dismissed. We, however, make it clear that the Commission shall decide the whole issue without being influenced by the observations made by the Appellate Tribunal for Electricity in accordance with law." 20. Once the matters were remanded to the Commission for rehearing on merits of each case, the Commission vide order dated 05.04.2014 allowed the petition for extension of the control period. To quote :- "11.26. Considering the above observations, we are of the view that the delay which occurred in commissioning of the power plant was due to the reasons beyond the control of the petitioner. Moreover, the petitioner had initiated construction activities of the Solar Power Project and completed the same which was recognized by the Chief Electrical Inspector in its letter dated 17.2.2012 and 13.03.2012 stating that the 8.64 MW Solar Power PV Project of the petitioner was ready on 1.02.2012 and 1.48 MW Solar PV Power Project of the petitioner was ready fo....
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....ent held that even under Regulation 85 of the Conduct of Business Regulations, the Commission was within its power to extend time and the same can be exercised even in an individual case. To quote : "10.11 We have gone through the Conduct of Business Regulations, 2004 and the provisions provided under Section 86 of the Electricity Act, 2003 and find that the learned State Commission has rightly passed the impugned order under its inherent powers. We are unable to accept the contention of the Appellant that the State Commission cannot exercise inherent power for the purpose of extending the control period. We may clarify that the control period of the tariff order is fixed by the State Commission itself and, hence, the State Commission has inherent powers to extend the control period of the tariff order. There is no restriction or fetter on the powers of the State Commission in the Electricity Act, 2003 or under the Conduct of Business Regulations, 2004 to pass such order as the State Commission may deem fit and appropriate in the interest of justice and discharge its functions under the Electricity Act, 2003. The Conduct of Business Regulations, 2004 provide inherent power....
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....s, it is not an order agreeing with or upholding the views of the Appellate Tribunal. It is also crucially relevant to note that even according to the Appellate Tribunal, as stated in paragraph 27 of the order dated 02.01.2013, it had only made "observations" and in view of those observations, the appeals were allowed by remitting the matters to the Commission. This Court clearly held that the "whole issue" should be examined "without being influenced by the observations made by Appellate Tribunal for Electricity". 25. The question before us is whether the Commission has the power to extend the control period provided under the tariff order. That question is no more res integra. There are two recent judgments of this Court which are relevant in this context. In Gujarat Urja Vikas Nigam Limited v. EMCO Limited and another , this Court at Paragraphs-39 and 40, has specifically held as follows: "39. Apart from that both Respondent 2 and the Appellate Tribunal failed to notice and the first respondent conveniently ignored one crucial condition of the PPA contained in the last sentence of Para 5.2 of the PPA: "In case, commissioning of solar power project is delayed....
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....this Court in Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure Limited and others , after analyzing scheme of the Act, has answered the question in affirmative. 27. The scheme of the Act has been analyzed at paragraphs-12 and 16, which read as follows: "12. While Section 61 of the Act lays down the principles for determination of tariff, Section 62 of the Act deals with different kinds of tariffs/charges to be fixed. Section 64 enumerates the manner in which determination of tariff is required to be made by the Commission. On the other hand, Section 86 which deals with the functions of the Commission reiterates determination of tariff to be one of the primary functions of the Commission which determination includes, as noticed above, a regulatory power with regard to purchase and procurement of electricity from generating companies by entering into PPA(s). The power of tariff determination/fixation undoubtedly is statutory and that has been the view of this Court expressed in paras 36 and 64 of A.P. TRANSCO v. Sai Renewable Power (P) Ltd. This, of course, is subject to determination of price of power in open access (Section 42) or in the case of open bidding (S....
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....he present case in the context of factual matrix and the relevant statutory provisions. An amendment to tariff by the Regulatory Commission is permitted under Section 62(4) read with Section 64(6) of the Act. Section 86(1)(a) clothes the Commission with the power to determine the tariff and under Section 86(1)(b), it is for the Commission to regulate the price at which electricity is to be procured from the generating companies. Section 86 (1)(e) deals with promoting co-generation and generation of electricity from renewable sources of energy . Therefore, there cannot be any quarrel with regard to the power conferred on the Commission with regard to fixation of tariff for the electricity procured from the generating companies or amendment thereof in the given circumstances. 30. Part X of the Act from Sections 76 to 109 deals with "Regulatory Commissions" providing for their constitution, powers and functions. Section 92 read with Section 94 provides for the proceedings and power of the Commission while exercising its functions and powers. Under Section 92, the proceedings of the Commission are to be governed by what is specified in the appropriate Regulation with regard to the t....
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.... in view of the special circumstances and such special circumstances are to be recorded in writing. However, it is specifically provided under Section 181 that there cannot be a Regulation which is not in conformity with the provisions of the Act or Rules. 34. Under Regulation 82, the Commission has powers to deal with any matter or exercise any power under the Act for which no Regulations are framed meaning thereby where something is expressly provided in the Act, the Commission has to deal with it only in accordance with the manner prescribed in the Act. The only leeway available to the Commission is only when the Regulations on proceedings are silent on a specific issue. In other words, in case a specific subject or exercise of power by the Commission on a specific issue is otherwise provided under the Act or Rules, the same has to be exercised by the Commission only taking recourse to that power and in no other manner. To illustrate further, there cannot be any exercise of the inherent power for dealing with any matter which is otherwise specifically provided under the Act. The exercise of power which has the effect of amending the PPA by varying the tariff can only be done ....
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....fically provided under the Act. 38. Extension of control period has been specifically held to be outside the purview of the power of the Commission as per EMCO (supra). This appeal is hence, allowed. The impugned orders are set aside. However, we make it clear that this judgment or orders of the Appellate Tribunal or Commission shall not stand in the way of the Respondent no.1 taking recourse to the liberty available to them for re-determining of tariff if otherwise permissible under law and in which case it will be open to the parties to take all available contentions before the Commission. 39. There shall be no order as to costs. JUDGMENT R. Banumathi, J. I have gone through the judgment of His Lordship Justice Kurian Joseph. His Lordship's judgment though comprehensive, having regard to the importance of the questions raised, I prefer to give my own reasonings for my concurrence. 2. An appeal under Section 125 of the Electricity Act, 2003 would be maintainable only on the grounds specified in Section 100 of the Civil Procedure Code i.e. only on substantial question of law. In the present case, the following substantial questions of law arise for determinati....
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....all apply for solar projects commissioned on or before 31st December 2011. In case, commissioning of Solar Power Project is delayed beyond 31st December 2011, GUVNL shall pay the tariff as determined by Hon'ble GERC for Solar Projects effective on the date of commissioning of solar power project or above mentioned tariff, whichever is lower." Under the Supplemental Agreement dated 10.05.2011, respondent No.1 agreed to oblige all the terms and conditions of the PPA including the deadlines for completing the project. The agreement also recognized that all other terms and conditions including tariff shall remain unchanged (clause 2.4). Clause 2.3 of the Supplemental Agreement specifically provided that since respondent No.1 had changed the location after lapse of significant time, respondent No.1 shall pay the liquidated damages even in case of non-availability of transmission system for evacuation. Because of change of location, GETCO had to replan the entire transmission line to be constructed. By executing the Supplemental Agreement and also by paying liquidated damages, respondent No.1 acknowledged that GETCO would require time to establish the evacuation facilities with refere....
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....of Gujarat during the control period of two years from the date of the order i.e. 29.01.2010 till 28.01.2012. The State Commission had adopted the capital cost of Solar Photovoltaic Power Project at Rs. 16.50 crores per MW and taking note of other aspects, the Commission determined the tariff for Solar Power Project at Rs. 12.54 per unit. The Commission had consciously fixed the control period for its order dated 29.01.2010 as two years, considering that the gestation period for Solar PV projects is six months and that for the Solar Thermal Projects is 18-24 months. Based on this Tariff Order dated 29.01.2010 for 1st respondent's Solar PV Power Project, tariff rate was fixed at Rs. 15 per kWh for the initial twelve years starting from the commercial operation of the project and Rs. 5 per kWh from the thirteenth year to twenty fifth year. 9. The Commission had published a Discussion Paper on 01.11.2011 for public view inviting comments from stakeholders and members of the State Advisory Committee on the draft order for the next Tariff Order. All the stakeholders had sent their views on the said draft. After considering the said views of the stakeholders, in exercise of the po....
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....inherent power of the Commission to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the Commission. 81. Nothing in these Regulations shall bar the Commission from adopting in conformity with the provisions of the Acts, a procedure, which is at variance with any of the provisions of these Regulations, if the Commission, in view of the special circumstances of a matter or class of matters and for reasons to be recorded in writing, deems it necessary or expedient for dealing with such a matter or class of matters. 82. Nothing in these Regulations shall, expressly or impliedly, bar the Commission to deal with any matter or exercise any power under the Acts for which no Regulations have been framed, and the Commission may deal with such matters, powers and functions in a manner it thinks fit." The State Commission and the Appellate Tribunal held that under the Conduct of Business Regulations, 2004 and Section 86 of the Electricity Act, 2003, the State Commission has inherent jurisdiction to extend the control period of the Tariff Order 2010 and the tariff rate thereon beyond 28.01.2012. The Appellate Tribunal furthe....
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....onsider the 'issue in accordance with law'. In my view, there is no merit in the contention that the question of law on the Commission's inherent jurisdiction to extend the control period has been settled inter-se the parties in the earlier round of litigation. Rival contentions of the parties on this question have to be considered now. 14. Under Regulations 80 to 82, the inherent powers of the State Commission are saved. Under Regulation 80, which is akin to Section 151 CPC, the power of the State Commission is only intended to regulate the conduct of the Commission, that is, to regulate its own procedure. That power cannot travel beyond its own procedure so as to alter the terms and conditions of the PPA entered into between the parties to grant substantive relief to the first respondent by extending the control period of Tariff Order (2010) beyond 28.01.2012. 15. By a reading of Regulation 80, it is clear that inherent powers of the State Commission are saved to make such orders as may be necessary:- (i) to secure the ends of justice; and (ii) to prevent abuse of process of the Commission. The inherent powers being very wide and incapable o....
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.... The inherent powers saved by Section 151 of the Code are with respect to the procedure to be followed by the Court in deciding the cause before it. These powers are not powers over the substantive rights which any litigant possesses. Specific powers have to be conferred on the courts for passing such orders which would affect such rights of a party." 30. In Manohar Lal Chopra v. Seth Hiralal AIR 1962 SC 527 this Court held: (AIR p. 533, para 21) "21. ... that the inherent powers are not in any way controlled by the provisions of the Code as has been specifically stated in Section 151 itself. But those powers are not to be exercised when their exercise may be in conflict with what had been expressly provided in the Code or against the intentions of the legislature." 31. In Ram Chand and Sons Sugar Mills (P) Ltd. v. Kanhayalal Bhargava AIR 1966 SC 1899 this Court reiterated that the inherent power of the court is in addition to and complementary to the powers expressly conferred under the Code but that power will not be exercised if its exercise is inconsistent with, or comes into conflict with any of the powers expressly or by necessary implication confer....
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....d 30.04.2010 shall remain unchanged, it must be performed by respondent No.1 in the same fashion as had been acknowledged by him. Mr. Giri further submitted that in terms of clause 2.3 of the Supplemental Agreement that respondent No. 1 has agreed that no changes in respect of respondent No. 1's liability to pay liquidated damages shall be entertained on account of delay in procuring transmission system or otherwise and respondent No. 1 actually paid an amount of Rs. 23.25 lacs to GUVNL on 14.07.2011 thereby indicating that respondent No. 1 had acceded to the terms and conditions of the PPA and that the project was not commissioned by its Scheduled Commercial Operation Date other than the reasons mentioned in clause 5.3 of the agreement. It was further argued that if the commissioning of the first respondent's project had been delayed due to the reasons beyond its control, respondent No. 1 would have invoked force majeure clause and by paying liquidated damages for the delay in commissioning, respondent No. 1 did not consider any of the events beyond its control. It was, therefore, urged that when respondent No. 1 had consciously accepted the terms of the PPA, respondent No....
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....er the Commission to vary the terms of the contract to the disadvantage of the consumers whose interest the Commission is bound to safeguard. Sanctity of PPA entered into between the parties by mutual consent cannot be allowed to be breached by a decision of the State Commission to extend the earlier control period beyond its expiry date, to the advantage of the generating company-respondent No. 1 and disadvantage of the appellant. Terms of PPA are binding on both the parties equally. 23. In Gujarat Urja Vikas Nigam Limited v. EMCO Limited and Another (2016) 11 SCC 182, facts were similar and the question of law raised was whether by passing the terms and conditions of PPA, respondent can assail the sanctity of PPA. This Court held that Power Producer cannot go against the terms of the PPA and that as per the terms of the PPA, in case, the first respondent is not able to commence the generation of electricity within the 'control period' the first respondent will be entitled only for lower of the tariffs. 24. The first respondent placed reliance upon Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure Limited and Others (2016) 8 SCC 743. In the said case, this Co....
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....ictated by the surrounding events and circumstances require a review of the tariff. The facts of the present case, as elaborately noted at the threshold of the present opinion, would suggest that the Court must lean in favour of such a view also having due regard to the provisions of Sections 14 and 21 of the General Clauses Act, 1898...." In the facts and circumstances of that case and that the tariff rate of Rs. 3.29/- per KWH was subject to escalation and subject to periodic review. Evacuation was changed from a distance of 4 kms. to 23 kms. from its switch yard. On account of the same, respondent No.1 therein had incurred an additional cost of about Rs. 10 crores which was not envisaged in the Concession Agreement. In such facts and changed circumstances, this Court thought it apposite to take a lenient view and allow the State Commission to re-determine the tariff rate. 25. In exercise of its statutory power, under Section 62 of the Electricity Act, the Commission has fixed the tariff rate. The word 'tariff' has not been defined in the Act. Tariff means a schedule of standard/prices or charges provided to the category or categories for procurement by licensee from genera....
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.... Giri submitted that such contention is contrary to the own admission of the first respondent. Contending that India's solor power installations have grown and cost tag of solor power has been reduced remarkably, learned Senior Counsel Mr. Giri submitted that even on equity, the first respondent cannot claim tariff rate as per Tariff Order (2010). It was contended that under the Tariff Order dated 29.01.2010 the capital cost was finalized at Rs. 16.50 crores per MW and tariff rate was fixed at Rs. 12.54 per kWh and for power project of 20 MW of respondent No.1, the total cost would be around Rs. 330 crores. Drawing our attention to the Tariff Order dated 27.01.2012, it was submitted that as per Tariff Order (2012), the capital cost was finalized at Rs. 10 crores per MW and for a 20 MW power project, this would amount to a total cost of about Rs. 200 crores. It was urged that the cost of solar PV projects which was in range in 2011 between Rs. 10.00 crores and Rs. 11.00 crores per MW is expected to further come down in future. In the counter affidavit filed by respondent No.1 before this Court, it is stated that the first respondent has invested about Rs. 200 crores in the proje....