Madhya Pradesh High Court
Grasim Industries Ltd vs Madhya Pradesh Electricity Regulatory ... on 2 November, 2020
Author: S.C.Sharma
Bench: Shailendra Shukla, S.C.Sharma
Writ Petition No.9250/2020
-1-
HIGH COURT OF MADHYA PRADESH: BENCH AT INDORE
DIVISION BENCH : HON'BLE SHRI JUSTICE S.C. SHARMA &
HON'BLE SHRI JUSTICE SHAILENDRA SHUKLA
Writ Petition No.9250/2020
Grasim Industries Limited
versus
Madhya Pradesh Electricity Regulatory Commission & Others
Shri Prashant Singh, learned senior counsel along with Shri Anshul
Tiwari, learned counsel for the petitioner.
Shri Sumer Singh Chouhan, learned counsel for respondent No.1.
Shri Abhishek Tugnawat, learned counsel for respondent No.2.
Shri Purushaindra Kaurav, learned Advocate General along with
Shri S. Sharma, learned counsel for respondent No.3.
ORDER
Delivered on this 2nd Day of November, 2020 Per : S.C. Sharma, J:
The petitioner before this Court, Grasim Industries Limited, a Company registered under the provisions of Companies Act, 1956, has filed this present petition challenging the constitutional validity of Regulation 4.1 dated 01.09.2017 as well as the Sixth Amendment to the MPERC (Co-generation and Generation of Electricity from Renewal Sources of Energy) (Revision - 1), Regulations, 2010.
02. The facts of the case reveal that the petitioner / Company is a Company registered under the provisions of Companies Act, 1956 and having its registered office at Birlagram, Nagda. The petitioner / Company is engaged in Writ Petition No.9250/2020 -2- the business of manufacturing Viscose Staple Fibre (VSF) and Sodium Sulphate. The petitioner / Company has established captive power plants having capacity of 116.79 MW and out of which 51.79 MW is based on Co- generation. The petitioner / Company, as stated in the writ petition, is generating 51.79 MW on Co-generation using coal and bio-sludge. Bio-sludge is a waste from Effluent Treatment Plant and the contention of the petitioner / Company is that bio-sludge is a Renewable Energy Source. The petitioner's contention is that the Electricity Act, 2003 deals with Co-generation and the petitioner / Company is using bio-sludge as a fuel to generate electricity.
03. It has been further stated that Madhya Pradesh Electricity Regulatory Commission, in exercise of powers conferred under Section 181 of the Electricity Act, 2003, has framed regulations which deals with Co-generation and Generation of electricity from all Renewable Sources of Energy and the regulations were framed in the year 2002. It has been stated that the MPERC modified its regulations in the year 2010 and issued a notification on 19.11.2010 and a legal classification was done.
04. It has been further stated that the Electricity Act, 2003 does not provide a distinction between Co-generation based on Renewable and Non-renewable Sources of Energy for the purposes of promoting Co-generation.
05. The petitioner / Company has further stated that in the year 2011, a writ petition was preferred i.e., W.P. No.16806/2011, challenging the same regulation and during the pendency of the writ petition, the respondent No.1 further amended the Regulation of 2010. The petitioner / Writ Petition No.9250/2020 -3- Company, later on, submitted an application for withdrawal of the writ petition and the writ petition was dismissed as withdrawn on 16.09.2015 with a liberty to file fresh proceeding, in case, occasion so arises in the matter.
06. The petitioner / Company has further stated that on 01.09.2017, the regulations were again amended and the term 'Co-generation' was substituted with the term 'Co- generation from Renewable Source of Energy'. The petitioner's contention is that in light of the amendment, Regulation 4.1 of the Sixth Amendment of the Regulation of 2010 notified on 01.09.2017 is contrary to the statutory provisions as contained under the Electricity Act, 2003, it is ultravires of Section 86 (1)(e) of the Electricity Act, 2003 and is also violative of Article 14 of the Constitution of India.
07. It has also been stated that Co-generation leads to conservation of energy and the amendment made by the respondents is also contrary to the National Policy of 1996. The petitioner's contention is that the impugned regulation has illegally classified Co-generation based on Renewable Source of fuel on a higher pedestal than those Co- generation plants, like the petitioner, which are based on other alternative sources of energy and the act of respondent No.1 / Commission is ultravires of Section 86 (1)(e) of the Electricity Act, 2003 and is also violative of Article 14 of the Constitution of India, as it creates an illegal classification between Co-generation Plants on the basis of type of fuel used, as such a classification has no nexus with the stated objective of Section 86 (1)(e) of the Electricity Act, 2003 which requires promoting Co-generation as a Writ Petition No.9250/2020 -4- whole and not based on any particular type of fuel. It has been stated that there is no such power delegated to the respondent No.1 / Commission, wherein it can override or sacrifice the promotion of Co-generation Plants based bio- sludge or other such waste products.
08. It has been further contended that as per Section 86 (1)(e), the respondent No.1 / Commission is under an obligation to promote Co-generation and it does not provide for a distinction or classification based on type of fuel, and therefore, the instant action of respondent No.1 to promote Co-generation plant based on classification of fuel is contrary to the provisions as contained under the Electricity Act, 2003.
09. It has further been contended that respondent No.1 / Commission, while exercising its regulation making power, has passed an order on 10.09.2014 wherein it was held that the proposal to amend the Regulations and to include the term 'Co-generation from Renewable Sources of Energy' is not required, however, the respondent No.1 / Commission, through the impugned regulations, has overturned its own specific and reasoned order without there being any change in the circumstances which led to the passing of the order dated 10.09.2014, and therefore, the aforesaid action on the part of respondent No.1 is illegal, arbitrary and opposite to law.
10. It has been also contended that by enacting Regulation 4.1 of the Sixth Amendment to the MPERC (Co-generation and Generation of Electricity from Renewal Sources of Energy) (Revision - 1), Regulations, 2010, the respondent No.1 / Commission has brushed aside the Writ Petition No.9250/2020 -5- regime given by it through the Second Amendment to the MPERC (Co-generation and Generation of Electricity from Renewal Sources of Energy) (Revision - 1), Regulations, 2010 without any justification. The petitioner's contention is that due to promulgation of the imunged regulations the Co- generation Power Plant of the petitioner, which was established in the year 1978, 2004 and 2009, is now ineligible to sell its power generation from the Co- generation plant with that of the minimum quantity of pwer required to be purchased by the Obligated Entities and the same is causing grave prejudice to the petitioner, who has acted consistently in accordance with the provisions of the Electricity Act, 2003.
11. The petitioner / Company has further contended that the regulation making power cannot be used to disadvantage the petitioner who is running a Co-generation plant and thereby promote only those based on Renewable Sources of Energy particularly when the Electricity Act, 2003 does not permit the Commission with any such power to do the same. The petitioner's contention is that it is a settled law that the power to 'carry out the purpose of the Act' is not a general power delegated but specific to the fulfillment of the provisions of the Act and cannot be used for actions which are not permitted under the Act. It has been stated that respondent No.1 / Commission, by enacting the impugned regulations, has overreached and transgressed the power delegated to it for 'carrying out the purposes of the Act' as it has created an illegal classification for Co- generation based power plants.
12. It has been further contended that as per Electricity Writ Petition No.9250/2020 -6- Act, 2003, the respondent No.1 / Commission is under an obligation to promote the term 'Co-generation' independently from Renewable Energy, however, the Commission, through the Co-generation Regulations, 2010 mixed up the terminology of the section 86 (1)(e) and enacted Regulation 4.1 stating that 'Obligated Entities' shall procure minimum quantity of electricity from Co- generation from Renewable Soruces of Energy.
13. Respondent No.1 / Madhya Pradesh State Electricity Regulatory Commission has filed a reply and stand of respondent No.1 is that the petitioner is having captive power plants of about 116.79 MW capacity for meeting the power requirements of its manufacturing activities for its plant located at Nagda which includes about 51.79 MW Co-generation plant. The Co-generation is based on coal and bio-sludge as fuel technology. The bio- sludge, which is used by the petitioner's Co-generation Plant, is a waste from the Effluent Treatment Plant.
14. The respondent No.1 / Commission in its reply has stated that Section 86 of the Electricity Act, 2003 provides for function of State Commission and it also deals with promotion of Co-generation and Generation of Electricity from Renewable Sources. It has been contended that in exercise of power conferred under Clause (zp) of sub- section (2) of Section 181 r/w section 86 (1)(e) of the Electricity Act, 2003, the respondent No.1 / Commission notified MPERC (Co-generation and Generation of Electricity from Renewable Sources of Energy) (Revision -
1), Regulations, 2010 on 19.11.2010. Separate provisions for minimum quantity of electricity to be produced from Writ Petition No.9250/2020 -7- generators of energy including Co-generation from Renewable Sources (Solar and Non-solar) along with banking policy were provided in the aforesaid Regulations.
15. Respondent No.1 / Commission has also stated that Regulation 3 of the MPERC provides the definition of Co- generation, Obligated entity, Renewable Energy Sources and in light of the definition provided under the Regulations, the Commission has specified the minimum quantity of electricity to be produced by all the Entities from renewable generator of energy including Co- generation from Renewable Sources of electricity expressing percentage of their total annual procurement of electricity energy during financial year 2010 - 11 to 2014 -
15.
16. The respondent No.1 / Commission has also stated that by virtue of the second amendment / addendum to MPERC Regulations, 2010, the Commission amended certain regulations including Regulations 4, 5, 7 and 10 thereby substituting the word "Co-generation from Renewable Sources of Electricity" by the word "Co- generation".
17. It has further been stated that by way of fourth amendment to MPERC Regulations, 2010, the trajectory for minimum quantum of energy to be procured by all obligated entities for financial year 2010 - 11 to 2015 - 16 was notified. It has been stated that the minimum quantum of electricity to be procured in percentage terms by all the Obligated Entities for the financial year 2015 - 16 was only added in amendment to Regulation 4.1 of Principal Regulations and the amendment was basically made for Writ Petition No.9250/2020 -8- providing Renewable Purchase Obligations to be fulfilled by the Obligated Entities in the financial year 2015 - 16.
18. It has been further contended by respondent No.1 / Commission that Fifth Amendment of MPERC Regulations, 2010, the minimum quantity of electricity to be produced by all the Obligated Entities for subsequent year i.e., financial year 2016 - 17 to financial year 2018 - 19 were added in Regulation 4.1 of Principal Regulations.
19. The respondent No.1 / Commission has further stated that the Fourth and Fifth Amendment to MPERC Regulations, 2010 were notified on 15.05.2015 and 02.10.2015 respectively, however, the aforesaid amendments have not been challenged on any of the grounds raised in the present case. It has been stated that only with a view to provide trajectory for further years to come i.e., financial year 2019 - 2020 to financial 2021 - 22, the sixth amendment in the aforesaid regulation was made and notified on 01.09.2017, which is challenged by way of the present writ petition.
20. The petitioner / Company has challenged Sixth Amendment to MPERC (Co-generation and Generation of Electricity from Renewable Sources of Energy) Regulations, 2010 and the same reads as under:-
"Notified on 01.09.2017 Madhya Pradesh Electricity Regulatory Commission 5th Floor, Metro Plaza, E-5 Bittan Market Bhopal - 462016 Dated : 31.08.2017 No.1249-MPERC-2017- In exercise of power conferred by clause (zp) of sub-section (2) of Section 181 r/w clause (e) of sub-section (1) of section 86 of the Electricity Act, 2003 (No.36 of 2003), the Madhya Prades Electricity Regulatory Commission hereby, makes the following amendments in the Madhya Pradesh Electricity Writ Petition No.9250/2020 -9- Regulatory Commission (Co-generation and Generation of Electricity from Renewable Sources of Energy) (Revision - 1) Regulations, 2010 which was published in the M.P. Gazette on 19.11.2010 namely:-
Sixth amendment to Madhya Pradesh Electricity Regulatory Commission (Co-generation and Generation of electricity from Renewable Source of Energy) (Revision - 1) Regulations, 2010 [ARG-33(I)(vi) of 2017] In the said Regulations, for the existing Regulation 4.1, the following Regulation shall be substituted, namely:-
4.1. The minimum quantum of electricity to be procured by all the Obligated Entities from generators of Renewable Energy including Co-
generation from Renewable Sources of electricity expressed as percentage of their total annual procurement of Electrical Energy excluding consumption met from hydro sources of power during the following Financial years shall as under, namely:-
S. No. Financial Year Cogeneration and other Renewable Sources of Energy Solar (%) Non Solar (%) Total (%) (1) (2) (3) (4) (5)
1. 2010 - 11 - 0.80 0.80
2. 2011 - 12 0.40 2.10 2.50
3. 2012 - 13 0.60 3.40 4.00
4. 2013 - 14 0.80 4.70 5.50
5. 2014 - 15 1.00 6.00 7.00
6. 2015 - 16 1.00 6.00 7.00
7. 2016 - 17 1.25 6.50 7.75
8. 2017 - 18 1.50 7.00 8.50
9. 2018 - 19 1.75 7.50 9.25
10. 2019 - 20 4.00 8.00 12.00
11. 2020 - 21 6.00 8.50 14.50
12. 2021 - 22 8.00 9.00 17.00
21. The respondent No.1 / Commission has further stated that the petitioner / Company has not challenged the prescribed trajectory, however, the petitioner is aggrieved only with a sentence "Generator of Renewable Energy including Co-generation from Renewable Sources of Electricity".
22. It has been stated that the present petition is only confined to the interpretation of the aforesaid Regulation in respect of aforesaid sentence only and Regulation 17 of the Writ Petition No.9250/2020 -10- Regulation of 2010 is having a provision for removal of difficulty and the petitioner does have a remedy under the Regulations to approach the Commission for removal of difficulty in implementing the provisions of Regulations. The respondent / Commission has stated that the regulations framed by them is certainly not at all ultravires of Electricity Act, 2003 nor violative of any constitutional provisions.
23. Rejoinder has also been filed by the petitioner in the matter and additional submission has also been filed on behalf of respondent No.1 / Madhya Pradesh Electricity Regulatory Commission. Reply has also been filed by other respondents in the matter.
24. Heard learned counsel for the parties at length and perused the record. The matter is being disposed of at admission stage itself with the consent of the parties through video conferencing.
25. The brief facts and chronological details involved in the present petition reads as under:-
(a) The petitioner / Company is a Company registered under the provisions of Companies Act, 1956 and is manufacturer of Viscose Staple Fibre (VSF) and Sodium Sulphate as by-product. To meet its power requirements, the petitioner / Company has established a captive generating plants based on Co-generation using coal and bio-sludge (fuel technology) within the premises located in Nagda which produces two forms of energy simultaneously i.e., Electricity and Steam and out of total installed capacity of 116.79 MW, about 51.79 MW is based on Co-generation.
Use of bio-sludge reduces the environmental pollution Writ Petition No.9250/2020 -11- caused by waste products, and therefore, was more efficient method of producing electricity.
(b) The Madhya Pradesh Electricity Regulatory Commission notified the MPERC ((Co-generation and Generation of Electricity from Renewable Sources of Energy) (Revision - 1) Regulations, 2010. On the same lines, 21 other states have also framed their similar Co- generation Regulations in the year 2010 which are not the subject matter of the present writ petition. Regulation 4.1 of the MPERC Regulations, 2010 provided for quantum of electricity to be procured by the Obligated Entities from generators of Renewable Energy.
(c) The petitioner / Company has written a letter to Madhya Pradesh Urja Vikas Nigam Limited / Respondent No.3 stating that it is entitled to Renewable Energy Credit on the power Generated from its coal based Co-generation Power Plants in terms of Co-generation Regulations, 2010. The petitioner / Company has further written a letter to Madhya Pradesh Urja Vikas Nigam Limited seeking registration of its Co-generation Plants for the purpose of accreditation.
(d) The petitioner / Company wrote another letter to Madhya Pradesh Urja Vikas Nigam Limited informing that its Co-generation based Power Plants is eligible for registration and accreditation under the Co-generation Rules, 2010, paritcularly as the APTEL has held that Co- generation has to be promoted as a whole and there can be no distinction on the basis of fuel.
(e) The petitioner / Company has filed a writ petition i.e., W.P. No.16806/2011 before this Court challenging the Writ Petition No.9250/2020 -12- MPERC Co-generation Regulations, 2010, wherein a specific ground has been raised by the petitioner is that it is not an 'Obligated Entity', and therefore, the RPO obligations cannot be imposed on the petitioner / Company.
(f) In the meanwhile, MPERC issued the Second Amendment, wherein the Commission has amended the Co- generation Regulations, 2010 inter alia, Regulations 4, 5, 7 and 10 and substituted the words "Co-generation from Renewable Sources of Electricity" with the term "Co- generation". In light of the second amendment, the petitioner / Company was not required to fulfill its minimum requirement of procuring electricity from Co- generation based on Renewable Sources.
(g) The petitioner / Company has issued a fresh letter to Madhya Pradesh Urja Vikas Nigam Limited and highlighted the provisions of the Second Amendment to the Co-generation Regulation, 2010 and sought registration and accreditation of its Co-generation Plants.
(h) Madhya Pradesh Urja Vikas Nigam Limited issued a letter to the petitioner / Company to complete formalities for registration and accreditation of the Co-generation Plants and also informed the petitioner / Company that it has to fulfill the RPO obligations for the date prior to the issuance of the Second Amendment to the Co-generation Regulations, 2010.
(i) In the meanwhile, the MPERC passed an order after hearing of all stakeholders and with due consideration of the issue involved. The Commission decided that the Third Amendment proposed by the MPERC to the Co-generation Regulations, 2010 wherein it sought to replace the word Writ Petition No.9250/2020 -13- "Co-generation with the term "Co-generation from Renewable Sources of Energy", is not required and was hence dropped.
(j) In light of this event, this Court has disposed of W.P. No.16806/2011 preferred by the petitioner / Company with a liberty to file fresh proceeding if occasion arises and all questions were left open.
(k) Subsequently, the respondent No.1 / Commission notified Sixth Amendment to the MPERC Co-generation Regulations, 2010, wherein the Commission has again amended Regulation 4.1 of the Co-generation Regulations wherein the term "Co-generation has now again been substituted with the term "Co-generation from Renewable Sources of Energy"
(l) Being aggrieved by the aforesaid, the petitioner / Company has now approached this Court challenging the Sixth Amendment being illegal, ultravires and arbitrary as the Co-generation based power plant of the Petitioner / Company is being imposed with RPO obligations as an 'Obligated Entity' while a Co-generation based on Renewable Energy is permitted to sell its Electricity / REC.
26. The relevant statutory provisions, which are necessary for adjudicating the present writ petition, are detailed as under:-
"Section 86 (Function of State Commission): - (1) The State Commission shall discharge the following functions namely:-
(e) promote co-generation and generation of electricity from renewable sources of energy by providing suitalb emeasures 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.
2(12) "Co-generation means a process which Writ Petition No.9250/2020 -14- simultaneously produces two or more forms of useful energy (including electricity). 3(xi) "Obligated Entities" means the entity such as the Distribution Licensee, Captive Consumers and Open Access Consumer who are mandated to fulfill Renewable Purchase Obligation under these Regulations;
3(xv) "Renewable Energy Sources" means the renewable sources such as samll Hydro, Mini Hydro, Wind, Solar, Biomass, Bio-fuel Co- generation, Urban / Municipal waste and such other sources as approved by MNRE."
27. Regulation 17 of the Regulations of 2010 reads as under:-
"Power to Remove Difficulties"
The Commission may suo motu or on an applicaton from any person generating electricity from Co-generation and Renewable Sources or Distribution Licnesee, review these Regulations and pass appropriate orders to remove any difficulty in implementing the provisions of these Regulations."
28. In light of the aforesaid regulation, the petitioner / Company is having an alternative remedy to prefer an application before the Madhya Pradesh Electricity Regulatory Commission.
29. It is an undisputed fact that the petitioner is using bio-sludge as a fuel to generate electricity, but the Co- generation does not fall within the definition of Renewable Sources defined under Section 3(xv) of the Co-generation Regulations, 2010, hence, it can never be said that the petitioner / Company is fulfilling its renewable Energy Obligations merely by using Co-generation method.
30. The MPERC has notified amendments including the impugned Sixth Amendment in exercise of power conferred under Clause (zp) of sub-section (2) of Section 181 r/w section 86 (1)(e) of the Electricity Act, 2003, and therefore, it cannot be said that MPERC has illegally amended Writ Petition No.9250/2020 -15- Regulation 4.1 of the impugned Sixth Amendment.
31. Keeping in view the need of the time, the MPERC has made total eight amendments in the Principal Regulations i.e., MPERC Co-generation Regulations, 2010. All the amendments were made after following process of pre-publication in terms of provision under Section 181(3) of the Electricity Act, 2003 followed by public hearing inviting comments / suggestion form stakeholders.
32. Prior to the Fifth Amendment, the following amendments were made by the MPERC:-
Fourth Amendment to Co-generation Regulations- Defined trajectory for minimum quantity to be procured by Obligated Entities for the financial year 2010 - 11 to 2015 - 16.
Fifth amendment to Co-generation Regulations- Trajectory for minimum quantity to be procured by Obligated Entities for financial year 2016 - 17 to 2018 - 19.
Sixth Amendment to Co-generation Regulations was issued - This time also trajectory for minimum quantity to be procured by Obligated Entities for the financial year 2019 - 20 to 2021 - 22 was defined.
33. In the case of Hindustan Zinc Limited v/s Rajasthan Electricity Regulatory Commission reported in (2015) 12 SCC 611, the Hon'ble Supreme Court in paragraphs - 1, 2, 3, 4, 16, 17, 29, 30, 31, 32, 33, 45, 55, 58 and 59 has held as under:-
"1. Leave granted These appeals by way of Special Leave are filed seeking to assail the order dated 31.08.2012, passed by the High Court of Rajasthan at Jaipur, in D.B. Civil Writ Petition No. 10911 of 2012 and batch matters, whereby, the High Court has upheld the validity of the Rajasthan Electricity Regulatory Commission Writ Petition No.9250/2020 -16- (Renewable Energy Obligation) Regulations, 2007 and Rajasthan Electricity Regulatory Commission (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010, directing the appellants to purchase minimum energy from renewable sources and comply with their liability under the said Regulations. These appeals by way of Special Leave are filed seeking to assail the order dated 31.08.2012, passed by the High Court of Rajasthan at Jaipur, in D.B. Civil Writ Petition No. 10911 of 2012 and batch matters, whereby, the High Court has upheld the validity of the Rajasthan Electricity Regulatory Commission (Renewable Energy Obligation) Regulations, 2007 and Rajasthan Electricity Regulatory Commission (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010, directing the appellants to purchase minimum energy from renewable sources and comply with their liability under the said Regulations.
2. Brief facts which led to the filing of these cases are as under: The appellants in this group of appeals are companies engaged in the business of production, manufacturing, selling non-ferrous metals, zinc and their by-products. They have established their own captive generation power plants in terms of the Electricity Act, 2003 (for brevity 'Act of 2003'). The Rajasthan Electricity Regulatory Commission (for brevity 'RERC') in exercise of its power under Sections 61, 66, 86(1)
(e) and 181 of the Act of 2003, vide Notifications dated 23.3.2007 and 23.12.2010, framed RERC (Renewable Energy Obligation) Regulations, 2007 (for brevity "the Regulations of 2007") and RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010 (for brevity "the Regulations of 2010"), respectively. The impugned Regulations imposed Renewable Energy obligation (RE obligation) on the Captive Gencos and other obligated entities including the appellants herein, who are Captive Gencos and open access consumers, to purchase minimum energy from renewable sources and to pay surcharge in case of shortfall in meeting the RE obligation.
3. The appellants have challenged the validity of the above-mentioned Regulations, by filing writ petitions before the High Court. The High Court vide its common impugned judgment dated 31.8.2012, after having discussed the legal Writ Petition No.9250/2020 -17- contentions urged on behalf of the parties at length, has dismissed the writ petitions as being devoid of merit. The High Court held that the RERC is empowered to frame the impugned Regulations of 2007 and 2010 and levy charge and surcharge thereby for not complying with obligations, in exercise of the powers conferred under Sections 61, 66, 86(1)(e) and 181 of the Act of 2003, in respect of the RE obligation imposed upon captive power plants and open access consumers, to purchase minimum energy from renewable sources and to pay surcharge in case of shortfall in fulfilment of such RE obligation. The High Court was of the opinion that neither the impugned Regulations can be said to be ultra vires the provisions of the Act of 2003 nor can it be said to be repugnant to Articles 14 and 19(1)(g) of the Constitution of India or the National Electricity Policy, 2005 or the Tariff Policy, 2006 framed under Section 3 of the Act of 2003. The appellants herein are seeking to assail the above common judgment and order dated 31.08.2012 passed by the Division Bench of the High Court.
4. Learned senior counsel for the appellants contended that the impugned Regulations are ultra vires to Sections 7, 9, 86(1)(a) and (e) and 181 of the Act of 2003, and also the fundamental rights guaranteed to the appellants under Articles 14, 19(1)(g) and it is in violation of Article 265 of the Constitution of India, the National Electricity Policy, 2005 and the Tariff Policy, 2006. They have contended that the Act of 2003 has been enacted by the Parliament with a view to encourage participation of private sectors involved in generation of electricity and with that objective, generation of electricity was de-licensed and captive generation was freely promoted and in this manner the impugned Regulations are violative of the basic object and intendment with which the Act was enacted. Further, it has been asserted that the National Electricity Policy, 2005 as well as the Tariff Policy, 2006 were framed to promote production of energy and utilization thereof to the maximum extent in respect of the captive generation plants and not to compulsorily force them to lower down their production of energy by making them purchase renewable energy as per the newly framed the impugned Regulation No.9 of Regulations 2010. It was also contended by them that the Act of 2003 has totally liberalized the establishment of captive power plants and kept them out of any licensing and regulatory regime, Writ Petition No.9250/2020 -18- neither any licence nor any approval from any authority is required to install a captive power plant and thus, the RERC had no jurisdiction to impose any obligation for compulsory purchase of electricity from a renewable energy source; the renewable energy source and captive generating plant are both alternative sources of energy which have to be promoted, one cannot be placed on higher or lower footing. The RERC by imposing a compulsory obligation to purchase electricity from renewable source and to pay surcharge in case of shortfall in meeting out the RE obligation as per the Regulation referred to supra has acted beyond the object sought to be achieved under the National Electricity Policy, 2005 as well as the Act of 2003.
16. The said Regulations are framed by the RERC with a laudable objective of achieving Directive Principles of the State Policy as provided in Article 48A read with Fundamental Duties under Article 51A(g) of the Constitution, which mandate upon the State and its instrumentalities to protect the environment in the area with a view to see that the citizens/residents of the area to lead a healthy life. This is the laudable object of the State and to achieve the same it has framed the National Electricity Policy, 2005 referred to supra.
17. Further, the impugned Regulations framed by the RERC which impose reasonable restriction as provided under Article 19(6) of the Constitution of India to achieve the Directive Principles of State Policy and to see that the State and its instrumentalities shall discharge their fundamental duties to protect and maintain environment in the area to facilitate the residents and living creatures to live peacefully. Reliance has rightly been placed upon the decision of the judgment of this Court in the case of Society For Unaided Pvt. Schools of Rajasthan v. U.O.I. & Anr. as under:
"252. Rights protected under Article 19(1)
(g) are fundamental in nature, inherent and are sacred and valuable rights of citizens which can be abridged only to the extent that is necessary to ensure public peace, health, morality etc. and to the extent of the constitutional limitation provided in that article.
XXX XXX XXX
255. Parliament can enact a social legislation to give effect to the directive principles of State policy..."
Writ Petition No.9250/2020 -19-29. The abovesaid legal contentions urged by the learned senior counsel on behalf of the appellants are wholly untenable in law for the reason that the Parliament with an avowed object to encourage private sectors participation in power generation, transmission and distribution of electricity to the consumers and inorder to distancing itself, the regulatory responsibilities from the Government has been conferred with the Regulatory Commissions in the country. The Electricity Act of 2003 being a self-contained comprehensive legislation in the matter of generation and the transmission and supply of energy to its consumers, the provisions of Section 82 of the Act of 2003 enjoin upon every State Government to constitute a Regulatory Commission in their respective State to regulate the implementation of the provisions of the Act of 2003 by framing suitable Regulations and Rules with reference to the matters/entries enumerated in Section 181 of the Act of 2003 and accordingly the State of Rajasthan has constituted the RERC. The functions of the Regulatory Commission have been mentioned under Section 86 of the Act of 2003.
30. Reliance was placed by the learned counsel for the respondent on the decision of this Court in the case of PTC India Ltd. v. Central Electricity Regulatory Commission9, wherein this Court has categorically held that Regulations can be framed by the Commission under the Act of 2003 as long as two conditions are satisfied, namely, that the regulations which are framed must be consistent with the provisions of the Act and are made for carrying out the provisions of the Act. Further, the National Electricity Policy, 2005 and Tariff Policy, 2006 being the policies framed by the Union of India cannot supersede or override the principal Act of 2003. To support their contention, the appellants have placed reliance upon the judgments of this Court in the cases of ITW Signode India Ltd. v. Collector of Central Excise and Secretary, Ministry of Chemicals & Fertilizers, Government of India v. Cipla Ltd. And Ors.
31. Further, Mr. Ganesh, the learned senior counsel on behalf of some of the appellants has placed reliance on the decision of this Court in the case of J.K.Industries Ltd. & Anr. v. Union of India & Ors. and contended that the impugned regulation is a subordinate legislation which may be struck down as arbitrary, contrary to the Statute Writ Petition No.9250/2020 -20- and Constitution of India on the ground that the subordinate legislation does not conform to the statutory or constitutional requirement as it offends Article 14 or 19 of the Constitution of India. It is further contended by him that such subordinate legislation, as in this case is the impugned Regulation famed by the RERC, does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature, therefore, the impugned regulation can be questioned on any one of the grounds on which plenary legislation is questioned and also on the ground that it does not conform to the Statute under which it is made, which in this case is Section 86(1)(e) of the Act of 2003. It was contended by him in view of the above that the impugned Regulations under which RE Obligation has been imposed on the appellants herein, the same is not in conformity with the provision made under Section 86(1)(e) of the Act of 2003.
32. The above contention of the learned senior counsel on behalf of some of the appellants has been rightly rebutted by the learned senior counsel on behalf of the RERC by contending that in the case of J.K. Industries Ltd. & Anr. (supra), it was held that where the validity of subordinate legislation is challenged, question to be asked is whether power given to the rule making authority has been exercised for the purpose for which it was given. The Court has to examine the nature, object and scheme of the legislation as a whole to consider what is the area over which powers are conferred upon the rule making authority. However, the Court has to start with the presumption that the Rule is intra-vires and has to be read down only to save it from being declared ultra-vires in case the Court finds that the above presumptions stand rebutted and the impugned regulations are relatable to the specific provision contained in Section 86(1)(e) of the Act.
33. Further, the impugned Regulation is framed by RERC in exercise of its power under Section 86(1)(e) read with Section 151 of the Act of 2003, which provides for promotion and co- eneration of electricity from renewable source of energy in the area. It has been rightly contended by the learned senior counsel for the respondents that Para 4.2.2 of the National Action Plan on Climate Change and Preamble of the Act of 2003 emphasise upon promotion of efficient and environmentally benign policies to encourage generation and consumption of green energy to Writ Petition No.9250/2020 -21- sub-serve the mandate of Article 21 read with Article 48A of the Directive Principles of the State Policy and Article 51A(g) of the Fundamental Duties enlisted under Chapter IVA of the Constitution of India. Further, the said Regulations are consistent with the International obligations of India, as India has ratified to the Kyoto Protocol on 26.08.2002. Further, the impugned Regulations which impose reasonable restrictions upon the captive generating plant owners are permissible under Article 19(6) of the Constitution of India.
45. The RERC has enacted 2007 and 2010 Regulations requiring the Captive Power Plants and Open Access Consumers to purchase a minimum quantum of Energy from Renewable Energy Sources, in order to effectuate the provisions of the Constitution of India, Electricity Act and the National Electricity Policy, since energy generated from Renewable Sources is pollution free. The Right to live with healthy life guaranteed under Article 21 of the Constitution of India, it has also been interpreted by this Court. It includes the Right to live in a pollution free environment and laid down the law in a catena of cases including Subhash Kumar v. State of Bihar & Ors., M.C. Mehta v. Union of India & Ors. and Municipal Corpn. of Greater Mumbai & Ors. v. Kohinoor CTNL Infrastructure Co (P) Ltd. The impugned Regulations fall within the four corners of the Act of 2003 as well as Electricity Policy, 2005. The object of imposing RE Obligation is protection of environment and preventing pollution by utilising Renewable Energy Sources as much as possible in larger public interest.
55. In view of the above, it is a matter of fact that the impugned Regulation does not have the effect of curtailing the power generation of the Captive Power Plant as the appellants have the right to supply surplus power to the grid.
58. Further, the submission of the appellants that the impugned Regulations do not fall under Clause (a) to Clause (zp) of Section 181(2) of the Act of 2003, which give power to the State Commission to frame Regulations is devoid of any merit. The said contention has been rightly rebutted by the learned counsel for the RERC that the said submission loses sight of Section 181 (1) of the Act of 2003 which provides that the State Commission may, by notification, make Regulations consistent with the Act and the Rules generally to carry out the provisions of the Act. The specific power under the various clauses of Writ Petition No.9250/2020 -22- Section 181(2) of the Act of 2003 is without prejudice to the general and wider power contained in Section 181(1) of the Act of 2003. The 2007/2010 Regulations have been framed by the RERC to effectuate the provisions of Section 86(1)(e) read with Section 86(4) of the Act of 2003 and are covered by Section 181(1) of the Act. In support of the same, reliance was placed on the decision of this Court on the case of PTC India Limited (supra)that the Regulations can be made under the Act as long as two conditions are satisfied, namely, that they are consistent with the Act of 2003 and are made for carrying out for provisions of the Act.
59. The purchase of nominal quantum of energy from renewable resources cannot adversely affect the cost effectiveness of the Captive Power Plant. Moreover, the object being reduction of pollution by promoting renewable source of energy, larger public interest must prevail over the interest of the industry herein which will in any case pass on the extra burden, if any, will be as part of the cost of its products and therefore, the same does not burden the appellants. The reliance placed upon the aforesaid paras of the policies is mis-conceived as the same pertains to the Captive Power Plants to be set up by group of consumers namely, small and medium industries and other consumers who are not in a position to set up a Captive Power Plant of optimal in a cost effective manner. The aforesaid para in the context of Section 2 (8) of the Act has no application to the case of the appellants which are large industries having individual Captive Power Plants. The provision of RE surcharge in the Statute is 58 only meant for ensuring compliance with the requirement of consumption of the specified quantum of energy from renewable sources and the same is to be used in case of shortfall in compliance of RE obligation. The said provision does not amount to imposition of a pecuniary liability."
The aforesaid judgment delivered by the Hon'ble Supreme Court makes it very clear that a similar challenge before the Hon'ble Supreme Court was repelled by holding the regulation framed by the Commission.
34. In light of the aforesaid judgment, as the Writ Petition No.9250/2020 -23- controversy stands concluded, this Court is of the considered opinion that the petitioner / Company has not been able to make out a case for interference. Accordingly, the present Writ Petition stands dismissed.
No order as to costs.
Certified copy, as per rules.
(S.C. SHARMA) (SHAILENDRA SHUKLA)
JUDGE JUDGE
Ravi
Digitally signed by Ravi Prakash
Date: 2020.11.03 14:16:34 +05'30'