Madras High Court
M/S.Srivela Smelters (P) Ltd vs Tamil Nadu Generation And on 23 August, 2022
Author: Mohammed Shaffiq
Bench: Mohammed Shaffiq
W.P.No.4360 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.08.2022
CORAM :
THE HON'BLE MR.JUSTICE MOHAMMED SHAFFIQ
W.P.No.4360 of 2015
and
M.P.No.1 of 2015
M/s.Srivela Smelters (P) Ltd.,
H.T.Sc.No.231,
76D, Valari Gate,
Velur Road, Tiruchengode 637 211,
Namakkal District,
Rep.by its Director,
L.Mohanraj. ... Petitioner
Versus
1.Tamil Nadu Generation and
Distribution Corporation Ltd.,
Rep.by its Chairman and
Managing Director, No.144, Anna Salai,
Chennai-600 002.
2.The Director / Finance,
TANGEDCO,
144, Anna Salai,
Chennai-600 02.
3.The Superintending Engineer,
Namakkal Electricity Distribution Circle,
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https://www.mhc.tn.gov.in/judis
W.P.No.4360 of 2015
Tiruchengode Road,
Namakkal District. ... Respondents
Prayer : Writ Petition filed under Article 226 of the Constitution of
India praying to issue a Writ of Certiorari, calling for the records in
Lr.No.SE/ NEDC/ NKL/ DFC/ HT/ AS/ A3 /F.HTSC 231/ D/2015 dated
27.01.2015 of the 3rd Respondent and Quash the same as illegal,
arbitrary, unsustainable under law and against Section 9 of the Electricity
Act, 2003, where Open Access is permissible to the Captive generators.
For Petitioner : Mr.S.P.Parthasarathy
for Mr.K.Seshadri
For Respondents : Mr.Abul Kalam
Standing Counsel for R1 to R3
ORDER
The writ petition is filed challenging the impugned proceedings dated 27.01.2015 whereby the petitioner's request for adjustments of the banked energy generated through its wind farm S.C.Nos.35, 106 and 719 against the consumer in H.T.Sc.No.285 and 231.
2. Facts leading to the writ petition:
i) The petitioner is engaged in the manufacture of steel ingots. In view of the acute power shortage faced by the entire State and with a view to achieve energy security and to obtain assured source of power, 2/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 the petitioner erected 3 Wind Energy Generators (WEG) having a capacity of 1250 K.W. at Tiruppur District. The petitioner had applied for and obtained approval for wheeling of the power generated from the said WEG's to its H.T.Sc.No.285 Namakkal Electricity Distribution Circle with banking facility.
ii) Pursuant to the above agreement, the petitioner had been utilising the energy wheeled from its WEGs and banked the surplus power generated and utilised the same during lean months.
iii) The petitioner had another factory with H.T.Sc.No.231 in view of the power crisis and to tide over the same and to enjoy continued power supply to its own factory, filed an application dated 18.01.2013 to the 3rd Respondent seeking for revised mode of achieving all the wheeled power at both the H.T.Sc. owned by the petitioner viz., H.T.Sc.Nos.285 and 231. The petitioner was given the benefit of utilizing the energy wheeled from its WEG's and utilising the same with the facility of banking surplus power generated during the wind months and utilizing the said banked energy during the lean months in respect of both HT.Sc's bearing Nos.285 and 231 of Namakkal Electricity Distribution Circle. The same was approved by the 3rd Respondent vide 3/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 its letters dated 19.01.2013 and 25.01.2013. The petitioner executed necessary wheeling agreements with the 3rd Respondent. The tabular column in the communication dated 19.01.2013 is relevant and thus extracted below:
"Based on the documents produced by you and as per your request, approval is hereby accorded for utility change of 1 x 850 KW Gamesa Make WEGs assigned with WF SC No.UGA 106 of this circle from the date of execution of revised agreement as per the details given below:
Sl. WFHTSC Capacity SF.No. / Date of Present Revised
No No. Village Commissioning mode of mode of
Utility utility
now
approved
1 UGA 106 1*850 kw 328/2 (p) of 01.08.2012 Wheeling Wheeling
Sirukinaru to HT SC to HT SC
Village, No.285 No.231
Dharapura of of
m TK, Namakka Namakka
Tirupur DT l EDC l EDC
(under and HT
REC SC.No.28
Scheme) 5 of
Namakka
l EDC
with
surplus
energy
for
banking
(under
generaliz
ed
scheme)
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W.P.No.4360 of 2015
3. After effecting the adjustments of the banked energy against H.T.Sc.Nos.285 and 231, the Respondent raised monthly consumption bills permitting adjustment of the banked units. While so, the petitioner was served with the impugned communication dated 27.01.2015 whereby the 3rd Respondent had unilaterally stated that in pursuance of the clarification from the head quarters it is not permissible for the petitioner to utilise the banked energy against H.T.Sc.No.231 and that they are entitled to claim the payment in respect of the banked energy, while directing the petitioner to remit the alleged short levy with regard to H.T.Sc.No.231. It appears that the impugned order was made drawing inspiration from Circular in Lr.No.CFC/ FC/ DFC/ AAO.HT/ AS.3/ REV/ D.No.100/ 13 dated 21.05.2013.
4. It is submitted by the learned counsel for the petitioner that the impugned proceedings are bad for the following reasons:
a. The question whether the banked energy can be used by another H.T. service connection which qualifies as a captive generating plant had been decided in TNERC in DRP No.8 of 2009 dated 26.08.2009 wherein 5/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 it has been held that it is permissible for the captive generator to utilise the banked energy against the H.T.Sc.No.1594 which qualifies as a captive generating plant.
b. The circular dated 03.01.2013 was in consonance with the order passed by TNERC in D.R.P.No.8 of 2009 dated 26.08.2009. The circular dated 21.05.2013 which forms the basis of the impugned proceedings is unsustainable in law for it does not have any statutory backing.
5. To the contrary, it was submitted by the learned counsel for the Respondents that the demands raised by the Respondents are legal and valid and in consonance with the Circular dated 21.05.2013 and thus submitted that the submissions of the petitioner does not have any merit.
6. Heard both sides, perused the materials available on record.
7. It appears that the impugned order may not be sustainable as it suffers from the following infirmities:
a. The impugned order is based on Circular dated 21.05.2013. b. To a pointed question if there are any provision under Electricity 6/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 Act, 2003 or any of the connected Regulations/ Codes/ Rules which enables or confers authority on the Director or any other of TNERC to issue Circulars of the nature of the one dated 21.05.2013, no provision/ Regulation was brought to the notice of this Court. In other words, there is no enabling provision under the Electricity Act, 2003 or any Code/ Regulation conferring authority on the Director or any other authority of TANGEDCO to issue circular of the nature of one dated 21.05.2013.
c. TNERC in DRP No.8 of 2009 dated 26.08.2009 has held that it is permissible for a captive generator to utilise the banked energy against additional service connection which qualifies as a captive generating plant. Once there is an order of TNERC, it appears extremely doubtful, if an executive/ administrative order can be made contrary to the same. To the contrary, it appears that if the Board was aggrieved by the order of the TANGEDCO it ought to redress its grievance by preferring an appeal in terms of the Electricity Act, 2003. It may not be permissible to get over the orders of the TANGEDCO through executive instructions.
d. That there is an agreement which permitted the petitioner to use the banked energy until 31st March of the particular financial year and it is only thereafter that the surplus banked energy is eligible for 7/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 encashment at the rate of 75% of the purchase rate.
8. In this regard, the order of TNERC being binding on the Board/ licensee any clarification by the Board ought to be in conformity with the orders of TNERC, Afortiorari in the absence of any enabling provision, conforming authority on the Board to issue clarification. This Court finds that issuance of these Circulars which are in disregard and contrary to the binding orders of TNERC are unsustainable. It is also brought to the notice of this Court that TNERC has also expressed its concern over the unilateral issuance of Circulars by the Board contrary to its orders has resulted in unnecessary and avoidable litigation. In this regard, it may be relevant to refer the TNERC order which reads as under:
Order in M.P.No.10 of 2012:
"8. .........Thus, R & C Measures is not a new issue. Prior approval of the Commission was sought by TNEB for introducing the R&C Measures in the year 2008 in addition to the approval of the Government of Tamil Nadu. Applying the same analogy, it is but appropriate that prior approval of the Commission ought to have been obtained by TANGEDCO before issue of the 8/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 circulars levying excess demand and energy charges. This is all the more important in view of the fact that having acquiesced to the jurisdiction of the Commission at the time of instruction of R&C Measure in the year 2008. TANGEDCO cannot turn around and say that such measures can be taken on its own. To put it otherwise, having known that approval of the Commission is mandatory for levying excess demand and energy charges and having done the same without the approval of the Commission. TANGEDCO cannot come up with an entirely different interpretion of Regulation 38 of the TN Electricity Distribution Code now. It is true that Regulation 38 empowers TANGEDCO to effect Restriction and Control Measures but as rightly pointed out by Thiru.Rahul Balaji, Advocate that the same has to be done after seeking approval of the Commission and the present action of TANGEDCO amounts to tinkering with the provisions of the Electricity Act 2003 and the regulations made thereunder. Further, the said circulars have enlarged the scope of Regulation 38 by providing for excess demand and energy charges without the approval of the Commission. Therefore, the third issue is answered against the Petitioner TANGEDCO. "
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https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 Order in S.M.P.No.1 of 2014:
''7.30: ......... The Commission directs that any clarification required regarding the Commission's order, the Licensee shall request for such clarifications before issuing any contrary circulars / instructions to the field which results in unnecessary litigations and causes inconvenience to the concerned.'' Order in D.R.P.No.19 of 2013:
''5.6. ..... In the absence of expressed law, the best option for the TANGEDCO should have been approaching the Commission for issue of such orders. This has not been done by the TANGEDCO. Therefore, we have no hesitation to declare that the TANGEDCO's letter No.CEC/FC/REV/AAO/HT/D.606/2012, dated 14- 09-2012 is arbitrary and not legally valid.'' (emphasis supplied)
8. This Court finds that impugned order suffers from gross non-
application of mind and that it has been made in gross violation of principles of natural justice. The impugned order is thus set-aside, inasmuch as no notice was issued prior to the issuance of the demand 10/12 https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 notice. The Respondents are however granted liberty to take fresh proceedings. It is however made clear that any such proceedings shall be in consonance with principles of natural justice and the petitioner shall be afforded reasonable opportunity of being heard.
9. With the above observation, the writ petition stands disposed of.
No costs. Consequently, miscellaneous petition is closed.
23.08.2022 Speaking (or) Non-Speaking Order Index: Yes/ No Internet: Yes/No ssn To:
1. The Chairman and Managing Director, Tamil Nadu Generation and Distribution Corporation Ltd., No.144, Anna Salai,Chennai-600 002.
2.The Director / Finance, TANGEDCO, 144, Anna Salai, Chennai-600 02.
3.The Superintending Engineer, Namakkal Electricity Distribution Circle, Tiruchengode Road, Namakkal District.
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https://www.mhc.tn.gov.in/judis W.P.No.4360 of 2015 MOHAMMED SHAFFIQ, J., ssn W.P.No.4360 of 2015 and M.P.No.1 of 2015 23.08.2022 12/12 https://www.mhc.tn.gov.in/judis