Calcutta High Court (Appellete Side)
Mansarovar Ferrous Private Limited & ... vs Damodar Valley Corporation & Ors on 10 April, 2015
Author: Patherya
Bench: Patherya
1
2015.
b.
W.P. 18293 (W) of 2012
Mansarovar Ferrous Private Limited & Anr.
Vs.
Damodar Valley Corporation & Ors.
MR. Tapas Saha,
Mr. S. Diwanji.
....For the petitioners.
Mr. Pradeep Tarafdar,
Mr. Sudip Deb,
Mr. Barnik Ghosh.
....For the D.V.C.
By this writ petition, the petitioner seeks declaration that the 2005 regulation
is ultra vires the Constitution of India. Therefore, the notice dated 16th December, 2011
and disconnection notice dated 30th April, 2012 be set-aside.
The case of the petitioner is that the respondent no.1 D.V.C. is a generation
company and has been created under the 1948 Act. Besides generation, it also supplies or sells electrical energy which it is entitled to do and this is only to consumers who have a requirement of over 30,000 volts namely high tension consumers.
Section 14 of the 2003 Act postulates grant of licence to any person in respect of transmission, distribution and trading of electricity. By virtue of the 4th proviso of Section 14 of the 2003 Act, the respondent no.1 D.V.C. is deemed to be a licensee under the 2003 Act and as it generates electrical energy, it is involved in the business of generation and supply of electrical energy. In no way does it come within the purview of a distribution licensee as postulated under Section 2(17) of the 2003 Act. 2 Distribution system as per Section 2(19) of the 2003 Act postulates setting up of a network for distribution purposes which network has not been established by the respondent no.1 D.V.C. Section 42 lays down the duties of the distribution licensee and Section 47 empowers the distribution company to seek security deposit but the respondent no.1 D.V.C. will not be entitled to realise security deposit from the petitioner as the said section can be taken recourse to only by a distribution licensee and the respondent no.1 D.V.C. is not a distribution licensee. Therefore, it is not entitled to seek deposit of security under the 2003 Act or under Regulation 4 of the 2005 Regulations.
Section 45 also supports the contention of the petitioner as charge is to be fixed by the State Commission and on fixing of tariff can said charge be levied. On levy of charge, security deposit can be levied. In the instant case, no tariff has been levied by the State Commission. Therefore, the basis for calculating security deposit is non- existent. Being a generation company alone, it is the CERC which was entitled to levy tariff and such tariff has been levied. As the respondent no.1 D.V.C. is not a distribution company, therefore, the notice dated 16th December, 2011 and notice of disconnection dated 30th April, 2012 be set aside.
Alternatively, in the event the contention of the petitioner is not accepted namely that the respondent no.1 D.V.C. is not a distribution licensee then in view of Section 47(5) of the 2003 Act and Regulations 4(iii) of the 2005 Regulation, let a pre- payment meter be installed in the premise of the petitioner in which case no security deposit need be given by the petitioner.
The request for pre-payment meter has been made by the petitioner in the representation submitted by it. The presentation of the representation has been denied by the respondent no.1 D.V.C. in the affidavit filed by it. In answer to a query raised by 3 the respondent no.1 D.V.C., it has been clarified that the CERC is to have jurisdiction in cases of generating stations and inter-state transmission of electricity. While for distribution of electricity and inter-state transmission, it is the state commission who will have jurisdiction. Therefore, being engaged in generation of supply as will be evident of Section 18 of the 1948 Act, the notice dated 16th August, 2011 ought to be set aside. So also the disconnection notice which is a follow up of the notice dated 16th December, 2011.
Counsel for the respondent no.1 D.V.C. submits that pursuant to Section 2 (17) of the 2003 Act, a huge network was created and developed by the respondent no.1 D.V.C. for distribution of electrical energy. Section 2 (17) has defined a distribution licensee and Section 47 has entitled a distribution licensee to recover security deposit. The functions of the respondent no.1 D.V.C. has been set out in Section 12 of the 1948 Act. By virtue of the 4th proviso of Section 14, the respondent no.1 D.V.C. shall be deemed to be a licensee under the 2003 Act. Deemed licensee, therefore, includes generation and distribution licensee. The state commission has accepted the respondent no.1 D.V.C. as a distribution licensee as will be evident from the letter dated 15th September, 2011 whereunder the annual report submitted by the distribution licensee including the respondent no.1 D.V.C. was placed on its website.
In the website of the Jharkhand, Regulatory Commission under the list of distribution licensee in the State of Jharkhand the name of the respondent no.1 D.V.C. finds mention. If it was not recognised as a distribution licensee, the name of the respondent no.1 D.V.C. would not be mentioned in the website of Jharkhand Commission as a distribution licensee. Therefore, in both West Bengal and Jharkhand, the respondent no.1 D.V.C. has been accepted as a distribution licensee. In fact while fixing the tariff of the generating company including the respondent no.1 D.V.C., CERC 4 has categorically stated that the respondent no.1 D.V.C. is deemed to be a distribution licensee.
Regulation 47 of the 2010 Regulation has also recognized a licensee to mean one who has been granted licence for distribution purposes and includes a deemed licensee under the 4th and 5th proviso of Section 14 of the 2003 Act.
In Clause 3 and in particular Clause 3.1 of CERC's order the respondent no.1 D.V.C. has been recognized as licensee purchasing electricity for purposes of distribution. In fact, in 2012, advertisements were issued informing DVC's intent to effect LT distribution system in Dhanbad area. Bills on account of LT supply has also been raised on consumers from time to time. This will evident that DVC is a distribution licensee engaged in LT supply.
The petitioner has also admitted that the tariff of DVC will be determined by the State Commission. This also reflects acceptance of the status of DVC as a distribution licensee.
The notice dated 16th December, 2011 is under challenge by which security deposit has been sought. Therefore, being a distribution licensee, DVC is entitled to issue the notice dated 16th December, 2011 and 30th April, 2012 and this application warrants no order and be dismissed.
In reply, counsel for the petitioner submits that Section 12 of the 1948 Act sets out the functions of DVC while Section 18 of the 1948 Act specifies the area of operation of DVC. Security deposit is fixed on charge levied and charge is based on the tariff determined. As the State Commission has not determined any tariff the question of levy of charge under Section 45 for recovery thereof does not arise far less recovery of security deposit which is based on the monthly charge.
5
Having considered the submission of the parties, the respondent no.1 D.V.C. is a creature of the 1948 Act and its area of operation is the State of Jharkhand and West Bengal. Section 12 of the 1948 Act describes the functions of DVC and that which is of relevance is Section 12(b) for the purpose of this writ petition and is as below:-
"12.
(b) the promotion and operation of schemes for the generation transmission and distribution of electrical energy, both hydra-electric and thermal."
Section 18 has made it clear that no person without the permission of DVC can sell electrical energy in the area of the respondent no.1 DVC. Section 18 will not operate as bar to DVC doing business as a distribution licensee. This fact will find support from the 4th proviso of Section 14 of the 2003 Act which reads as follows:-
"Provided also that the Damodar Valley Corporation, established under sub- section (1) of section 3 of the Damodar Valley Corporation Act, 1948 (14 of 1948), shall be deemed to be a licensee under this Act but shall not be required to obtain a licence under this Act and the provisions of the Damodar Valley Corporation Act, 1948, in so far as they are not inconsistent with the provisions of this Act, shall continue to apply to that Corporation."
Section 14 of the 2003 Act deals with grant of licence for the purposes of transmission, distribution and trade but in the case of the respondent no.1 DVC it has been recognized as a deemed licensee. The term licensee is of wide import and a person who has been granted licence under Section 14 which includes not only transmission and trading licence but also distribution licence. Therefore, being a deemed licensee, DVC is entitled to also distribute electricity. This, in fact, may be to a handful of consumers but distribution has been effected by it as will be evident from some of the bills raised by DVC on its LT consumers and advertisement was also published in 2012 6 wherefrom the intent of the DVC to distribute LT supply will be evident. CERC in its order dated 29th January, 2015 has also recognized DVC as a deemed distribution licensee.
The State Commission of West Bengal and Jharkhand have recognized DVC as a distribution licensee. In fact, the annual reports have also been submitted by the DVC to the State Commission. Therefore, one cannot ignore the status of DVC as a distribution licensee besides being a generation company engaged also in supplying electrical energy.
Regulation 47 of the 2010 Regulation has described a licensee to be one who not only distributes electricity but is a deemed licensee under the 1st, 4th and 5th proviso to Section 14 of the 2003 Act and a deemed licensee under the 4th proviso of the 2003 Act has recognized DVC to be one such licensee. Therefore, being a deemed licensee under Section 14 of the 2003 Act which includes a distribution licensee the respondent no.1 DVC was justified in issuing the notice dated 16th December, 2011 and although counsel for the petitioner submits that the issuance of the notice was not necessary in view of the power project agreement on a perusal of the power project agreement, it appears that under Clause 19, the consumer is to mandatorily open a confirmed irrevocable Revolving Letter of Credit in favour of the corporation with the United Bank of India at New Manicktola, DVC Extension Counter, Kolkata or in the Kolkata Branch of any Nationalised Bank, as may be mutually agreed upon for an amount equivalent to one month's estimated bills but the said cannot be equated to security deposit under the 2003 Act.
Therefore, as DVC has been recognized to be a distribution licensee issuance of the notice dated 16th December, 2011 so also the disconnection dated 30th April, 2012 cannot be faulted and this application merits no order and is accordingly dismissed. 7
Certified copy of this order, if applied for, be given to the parties on priority basis.
(Patherya, J.)