Gujarat High Court
Essar Steel India Limited vs Dakshin Gujarat Vij Company Limited on 22 January, 2015
Author: Abhilasha Kumari
Bench: Abhilasha Kumari
C/SCA/5621/2014 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 5621 of 2014
With
SPECIAL CIVIL APPLICATION NO. 2859 of 2014
With
SPECIAL CIVIL APPLICATION NO. 5494 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE SMT. JUSTICE ABHILASHA KUMARI
================================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the No judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? No 5 Whether it is to be circulated to the civil judge ? No ================================================================ ESSAR STEEL INDIA LIMITED....Petitioner(s) Versus DAKSHIN GUJARAT VIJ COMPANY LIMITED....Respondent(s) ================================================================ Appearance:
SCA No.5621/2014 MR.S.N.SHELAT, SENIOR ADVOCATE AND MR MIHIR H. JOSHI, SENIOR ADVOCATE WITH MR KEYUR GANDHI FOR NANAVATI ASSOCIATES for the Petitioner No.1 MR MIHIR THAKORE, SENIOR ADVOCATE WITH MS LILU K BHAYA, ADVOCATE for the Respondent (s) No. 1 SCA No.2859/2014 MR MIHIR THAKORE, SENIOR ADVOCATE WITH MS LILU K BHAYA, ADVOCATE for the Petitioner (s) No. 1 MR.S.N.SHELAT, SENIOR ADVOCATE AND MR MIHIR H. JOSHI, SENIOR ADVOCATE WITH MR KEYUR GANDHI FOR NANAVATI ASSOCIATES for the Respondent No.1 Page 1 of 112 C/SCA/5621/2014 CAV JUDGMENT SCA No.5494/2014 MR.S.N.SHELAT, SENIOR ADVOCATE AND MR MIHIR H. JOSHI, SENIOR ADVOCATE WITH MR KEYUR GANDHI FOR NANAVATI ASSOCIATES for the Petitioner No.1 MR MIHIR THAKORE, SENIOR ADVOCATE MS LILU K BHAYA, ADVOCATE for the Respondent (s) No. 1 ================================================================ CORAM: HONOURABLE SMT. JUSTICE ABHILASHA KUMARI Date : 22 /01/2015 COMMON CAV JUDGMENT
1. Rule is issued in each petition. Ms.Lilu K. Bhaya, learned advocate waives service of notice of Rule for the RespondentDakshin Gujarat Vij Company Limited in Special Civil Applications Nos.5621/2014 and 5494/2014. Mr.Keyur Gandhi, learned advocate for Nanavati Associates, learned counsel, waives service of notice of Rule for Respondent No.1Essar Steel India Limited in Special Civil Application No.2859/2014. As Respondent No.2 in Special Civil Applications Nos.5494/2014 and 2859/2014 is the Appellate Authority whose order is impugned in the said petitions, it is not necessary to issue notice of Rule to the said respondent.
2. Learned counsel for the respective parties have addressed final arguments, therefore, the petitions Page 2 of 112 C/SCA/5621/2014 CAV JUDGMENT are being heard and decided finally.
3. Special Civil Application No.2859/2014 can be said to be the lead matter and Special Civil Application No.5494/2014 is a crosspetition. The petitioner in the former petition is the Dakshin Gujarat Vij Company Limited ("DGVCL", for short). The petition has been preferred under Articles226 and 227 of the Constitution of India, challenging the order dated 01.11.2013, passed by the Appellate Authority, holding that the revised Supplementary Bill dated 25.01.2012 for an amount of Rs.192.58 Crores for 168.62 Million Units (MU) electricity issued by DGVCL upon respondent No.1Essar Steel India Limited (hereinafter referred to as "ESIL" or "Essar", for convenience) is not justifiable under the provisions of Section126 of the Electricity Act, 2003 ("the Act", for short), and directing DGVCL to revise the said bill by issuing a reduced bill for 25.23 MU electricity at twice the normal tariff (HTP1), and to refund the balance amount to Essar along with interest and the delayed payment charges thereon.
4. The latter petition is a crosspetition, wherein Page 3 of 112 C/SCA/5621/2014 CAV JUDGMENT the same order passed by the Appellate Authority has been challenged by ESIL to the extent that the appeal preferred by ESIL before the Appellate Authority has been partially rejected, by holding that ESIL has unauthorizedly used 25.23 MUs of power and thereby holding it liable to pay penal charges as provided under Section126 of the Electricity Act, 2003.
5. Special Civil Application No.5621/2014 does not arise from the abovementioned order of the Appellate Authority and does not appear to have any direct connection with the dispute involved in the above two petitions. The petitioner in this petition is ESIL and the petition is filed for quashing and setting aside the letters dated 05.04.2014 and 07.04.2014, issued by the respondentDGVCL, by way of which DGVCL has asked the Western Region Load Dispatch Centre (WRLDC) to withdraw the Open Access Permission granted to ESIL and has demanded Rs.126.67 Crores towards Cross Subsidy Surcharge and electricity dues. It is the case of ESIL that an amount of Rs.192.58 Crores is liable to be refunded to it pursuant to the order dated 01.11.2013, passed by the Appellate Authority (impugned in Special Civil Application No.2859/2014) Page 4 of 112 C/SCA/5621/2014 CAV JUDGMENT and the amount of outstanding dues of ESIL, including Cross Subsidy Surcharge, be deducted from the above amount.
6. The factual background in which Special Civil Application No.2859/2014 (the lead petition) and Special Civil Application No.5494/2014 (the cross petition) have been preferred, assumes some importance for a clear understanding of the issues involved in the petitions. Culled out from the record, it is being briefly recorded as below.
7. The petitioner in the lead petition is DGVCL, a company incorporated and registered under the relevant provisions of the Companies Act, 1956, engaged in the business of distribution of electricity in the southern region of the State of Gujarat, under the Act. It is a Distribution Licencee under the provisions of the Act.
8. The petitioner in the crosspetition is ESIL (of the Essar Group of companies), which is a company registered under the Companies Act, 1956, and is engaged in the business of manufacturing steel and allied steel products. It has set up its factory at Page 5 of 112 C/SCA/5621/2014 CAV JUDGMENT Hazira.
9. ESIL had set up a plant for the manufacture of Hot Rolled Steel Coils in the year 199091.
Subsequently, a power plant of 515 MW capacity was set up by Essar Power Limited, a group company of ESIL. The said power plant commenced operations in the year 1995. Essar Power Limited agreed to supply 300 MW power to the erstwhile Gujarat Electricity Board under a Power Purchase Agreement dated 30.05.1996. The rest of 215 MW of power was to be supplied to ESIL for its captive use. In the year 2005, another group company of ESIL, that is, Bhander Power Limited, also set up an additional Captive Power Plant of 505 MW capacity to cater to its captive needs. In addition to the plant of Bhander Power Limited, ESIL has its Captive Power Plant of 35 MW within the same complex. For the distribution of the aforementioned 505 MW and 515 MW capacity of power, ESIL and its group companies have set up a SubStation, including a BusBar, within its premises. DGVCL raised a dispute in the year 2006, for the payment of wheeling charges, on the ground that the Bus Bar vested in Gujarat Energy Transmission Corporation ("GETCO", for short) by virtue of the fact Page 6 of 112 C/SCA/5621/2014 CAV JUDGMENT that electricity flowed from one end of the BusBar to another. ESIL filed a writ petition before this Court, being Special Civil Application No.13886/2006. By judgment dated 15.01.2007, this Court held that Bus Bars are an integral part of the distribution system of GETCO, therefore, wheeling charges are payable by ESIL to DGVCL. Being aggrieved by the aforesaid judgment, ESIL preferred an appeal before the Division Bench of this Court, by filing Letters Patent Appeal No.254/2007, which came to be dismissed by judgment dated 30.08.2011. ESIL approached the Supreme Court against the judgment of the Division Bench, by filing Special Leave Petition (Civil) Nos.27540/2011 and 28099/2011, wherein the Supreme Court has granted an order of statusquo, and the matter is pending for final decision.
10. Subsequently, ESIL decided to increase the manufacturing capacity of the steel plant on account of the growing demand for steel and allied products. Accordingly, ESIL and its group companies set up four additional units, namely (i) Essar Steel (Hazira) Limited (ESHL), (ii) Hazira Plate Limited (HPL), (iii) Page 7 of 112 C/SCA/5621/2014 CAV JUDGMENT Hazira Pipe Mill Limited (HPML) and (iv) Essar Steel Orissa Limited (ESOL). The first three units were established within the same complex, adjacent to the main manufacturing facility and the fourth unit was established in the State of Odisha.
11. Pending the hearing and final disposal of the Letters Patent Appeals, ESIL wanted to resolve the issue of wheeling of power from Bhander Power to Essar Steel, and for the said purpose, wanted to shift the IchchhaporSachin Line. Power is also received by ESIL, as a consumer, from the distribution Licencee DGVCL. It was felt necessary that, in view of the claim of GETCO for transmission charges and looking to the nature of the distribution of electrical energy and consumption of power by units of the Essar Group from the power plants situated within the complex through the common integrated line/Bus Bar, and to ensure that no power supplied by DGVCL, or any power incidentally flowing through the BusBar on account of it being connected to the SubStations of the distribution/transmission Licencees at both ends, should be consumed by any entity other than ESIL, a Page 8 of 112 C/SCA/5621/2014 CAV JUDGMENT consumer of UGVCL, an appropriate resolution of the above issues ought to be worked out.
12. A meeting was, therefore, held at Gandhinagar, under the Chairmanship of Shri D.J.Pandian, Principal Secretary, Energy & Petro Chemicals Department, on 01.02.2010, to resolve the issues raised by the Essar Group. The said meeting was attended by the Managing Director of Gujarat Urja Vikas Nigam Limited ("GUVNL", for short), Executive Director (Finance) of GUVNL, Managing Director of GETCO, Chief Electrical Inspector and representatives of the Essar Group and Bhander Power Limited, to discuss the issue of the shifting of the Ichchhapor line and supply of power to the Essar Group companies from Bhander Power Limited. GUVNL is the holding company of GETCO and DGVCL. After discussions on the issue of ensuring that the supply of power to Essar Group companies would only be from the power plants located in the complex and that DGVCL power is used only by its consumer, namely, ESIL, it was suggested that an amicable solution be arrived at, within the framework of regulations. The final solution contemplated was the isolation of a section of the integrated line/BusBar in such a manner that Page 9 of 112 C/SCA/5621/2014 CAV JUDGMENT the incidental power flowing through the lines, on account of it being connected at both ends to the Sub Stations would stop, thereby ensuring appropriate accounting and metering of the electricity consumption of the various units in the complex. Certain decisions were taken by the authorities in this regard as recorded in the Minutes of the Meeting dated 01.02.2010, principally being that all member units of the Essar Group (other than the consumerESIL) should become consumers of the Distribution Licencee - DGVCL so that the question of a nonconsumer incidentally, or inadvertently, availing of power from DGVCL would not arise. Alternatively, it was suggested that all the electrical lines supplying power to the member units are run in isolation of the integrated line/Bus Bar and also from the DGVCL connection for the contracted demand, in order to achieve the purpose that DGVCL power is not consumed, either incidentally or inadvertently, by nonconsumers in the complex.
13. ESIL proposed that it would install a reverse power flow relay system to ensure that, at no point of time, DGVCL power would flow through the BusBar to the member units since, in the event of a flowback of Page 10 of 112 C/SCA/5621/2014 CAV JUDGMENT energy from the BusBar to Bhander Power Limited, the reverse power flow relay would trigger the automatic opening of the existing isolator on the line, which would stop the current from flowing into Bhander Power Limited. ESIL was directed that meters should be placed on the electrical lines which connected Bhander Power Limited with the BusBar, which would record electrical energy flowing back through the BusBar directly, or indirectly, to the electric lines supplying energy to the other member units of the Essar Group companies, which were not consumers of DGVCL. It was further directed that in the event that any energy was found so recorded, the power consumed would be treated as DGVCL power and would be charged at the rate of twelve times, at twice the normal rate.
14. Certain steps were directed to be taken by ESIL, in line with the decision of the authority, inter alia, being that of the two electrical lines connecting Bhander Power Limited with the BusBar, one line would remain connected on which the reverse power flow relay and the meter would be installed and the other line would be disconnected from the BusBar and Page 11 of 112 C/SCA/5621/2014 CAV JUDGMENT connected to the unit of Essar Steel (Hazira) Limited, which was the only other unit utilizing energy at 220 KV. The second line would terminate at Essar Steel (Hazira) Limited.
15. On 30.06.2010, an event took place which has some relevance to the dispute involved in the petitions. The High Court sanctioned the Scheme of Amalgamation between Essar Steel India Limited, Essar Steel (Hazira) Limited, Hazira Plate Limited, Hazira Pipe Mill Limited and Essar Steel Orissa Limited by an order of that date. The Scheme was to be effective on the date on which the last of the necessary certified copies were filed with the Registrar of Companies of the respective States. The effective date under the Scheme was 05.08.2010.
16. Pursuant to the meeting dated 01.02.2010, ESIL took steps for the installation of the reverse power flow relay. There were two electrical lines connecting Bhander Power Limited to the BusBar. On both these lines, four line isolators (two each) had already been installed earlier as approved by the Chief Electrical Inspector. On the first line the reverse power flow Page 12 of 112 C/SCA/5621/2014 CAV JUDGMENT relays were installed in such a manner that in the event any power flow was detected from the BusBar to Bhander Power Limited (reverse flow), it would automatically trigger the opening of the line isolators, which would forthwith stop the reverse flow of power. As far as the second line was concerned, the same was diverted from just before the existing line isolator, close to the BusBar, by underpass to Essar Steel (Hazira) Limited. To ensure that there was no reverse flow from the BusBar on account of the pre existing segment of the second line after the underpass connection, the line isolator on that segment second line was kept open. The modification of the second line was duly approved by the Chief Electrical Inspector. In the meanwhile, meetings were held on 24.01.2011 and 27.01.2011, under the Chairmanship of Shri D.J.Pandian, Chairman, GUVNL and Secretary, Energy and Petro Chemicals Department, which were attended by the Chief Engineer and In charge Managing Director of DGVCL, State Load Dispatch Centre of GETCO and representatives of the Essar Group, with a view to determining the methodology of energy accounting in respect of the unit of ESIL (a Page 13 of 112 C/SCA/5621/2014 CAV JUDGMENT consumer of DGVCL) to be implemented after the shifting of the Ichchhapor line. It was recorded that the work of shifting of the Ichchhapor line had been completed and, therefore, the metering locations would have to be changed and the metering should be such which would accurately record the actual consumption of the consumer of the Distribution Licencee, namely, ESIL, as also the energy accounting of Essar Power Limited, Bhander Power Limited and the Captive Power Plants of Essar Steel India Limited. It was decided that no transmission charges/distribution charges would now be claimed against Essar and a formula was derived for measuring the consumption of Essar Steel Limited so that the existing meters would only be utilized for the purpose of verification. It was decided that no transmission charges would be applicable on the power scheduled from Essar Power, Bhander Power Limited, and the Captive Power Plants to ESIL. Similarly, no transmission losses would be applicable for the power scheduled from Essar Power, Bhander Power Limited and Captive Power Plants to ESIL, as these losses of radial system would automatically be counted in the drawl of ESIL. Hence, Page 14 of 112 C/SCA/5621/2014 CAV JUDGMENT the actual losses of the radial system would automatically be borne by ESIL. It was further decided that ESIL would apply to DGVCL for the shifting of metering locations at IchchhaporSachin lines for deriving the consumption of power by ESIL, as per the above formula.
17. Essar addressed a letter dated 21.05.2011 to GETCO, stating that the Scheme of Amalgamation had been sanctioned by the High Court and has become effective from 05.08.2010, therefore, the units/companies covered under the Scheme, interalia, being Essar Steel (Hazira) Limited had merged into Essar Steel India Limited which was an existing consumer of DGVCL and, therefore, the contract demand of Essar Steel India Limited would automatically cover the supply to the units of the merged entities and the reverse power flow relay should be removed. According to Essar, there is no company having its units within the complex which is not covered under the Scheme of Amalgamation.
18. By reason of the merger, the power requirement of Essar Steel India Limited increased; therefore, it applied to DGVCL on 01.06.2011, for the increase in Page 15 of 112 C/SCA/5621/2014 CAV JUDGMENT the contract demand from 44.5 MVA to 60 MVA.
19. On 04.06.2011, GETCO informed ESIL that the details of the amalgamation should be submitted to DGVCL for confirmation, and after the factum of amalgamation was verified, and after personal inspection at the site in order to ensure that the power of DGVCL was not being utilized by other units not covered under the amalgamation, the reverse power flow relay could be removed by GETCO. By a communication of the same date, GETCO directed DGVCL to take steps for the removal of the reverse power flow relay.
20. Essar addressed a letter to DGVCL for the removal of the reverse power flow relay on an urgent basis, stating that there was a problem of frequent line tripping and low utilization of the additional power of 200 MW purchased from GUVNL, by an Agreement dated 13.05.2011, under open access.
21. In response to the application made by Essar for increase in the contract demand on 09.06.2011, DGVCL directed ESIL to get the power boundary approved. Page 16 of 112 C/SCA/5621/2014 CAV JUDGMENT Accordingly, on 15.06.2011, Essar made an application seeking the extension of the power boundary of ESIL, so as to include within it, the units of the companies which had merged with ESIL and the unit of Essar Heavy Engineering Services Limited, as a single consumer of DGVCL.
22. On 21.06.2011, DGVCL addressed a letter to ESIL stating that the documents submitted along with the application dated 15.06.2011, for the extension of the power boundary, were not complete and all relevant documents be submitted in order to process the application. On 27.06.2011 and 01.07.2011, Essar addressed letters to DGVCL, submitting further documents and details and seeking sanction/approval for the removal of the underpass arrangement and the final proposed arrangement for restoration of the earlier position and connections regarding the main receiving SubStations.
23. On 21.06.2011, the officers of DGVCL and GETCO conducted an inspection of the premises of Essar in the presence of its officers and found that DGVCL Page 17 of 112 C/SCA/5621/2014 CAV JUDGMENT power was being taken to the units of the companies which had merged with ESIL vide the order dated 30.06.2010, and the unit of Essar Heavy Services Limited through the grid, although the said units were not the consumers of DGVCL. It was also found by DGVCL that the Bhander Power Limited end of the Tie Line2 had been disconnected, indicating that no power from Bhander Power Limited was being utilized by such units and only DGVCL power was being utilized. On retrieval of the MRI data of the apex meter, DGVCL was able to determine that DGVCL power was being utilized with effect from 17:00 hours on 15.06.2011 upto 21.07.2011.
24. DGVCL, therefore, issued a notice dated 26.07.2011, to ESIL, interalia, pointing out the aforesaid facts and stating that this action of Essar amounted to a clear breach of the Agreement as recorded in the Minutes of Meeting held on 01.02.2010. Essar was asked to clarify, within seven days, why the quantum of power imported from the grid should not be charged at the rate of twelve times the quantity found to have been utilized, at twice the normal rate (HTP
1) of DGVCL. It further asked ESIL to immediately restore the original position of Tie Line2 as Page 18 of 112 C/SCA/5621/2014 CAV JUDGMENT existing prior to 15.06.2011. In response to the said notice, Essar addressed a letter dated 29.07.2011, contending, interalia, that as informed earlier, on account of the additional load on the lines due to supply and consumption of additional 200 MW of power from GUVNL under open access, it was facing frequent tripping of lines which caused black out and damage to the plant and, therefore, there was an urgent need to remove the reverse power relay. It was further contended that the closing of the line isolator did not result in any power supplied by DGVCL to flow to units which did not stand merged with ESIL, therefore, there was no breach of any condition of the Minutes of the Meeting dated 01.02.2010, and the demand made by DGVCL was not justified. However, Essar agreed to restore the original position prevailing prior to 15.06.2011, and also requested DGVCL to expedite the decision on the application for the extension of the power boundary already made by it. The original position was duly restored by Essar and recorded vide email dated 30.07.2011.
25. Essar made another representation to DGVCL on 08.09.2011, contending that after the merger of the Page 19 of 112 C/SCA/5621/2014 CAV JUDGMENT other companies whose units were within the complex, their identities were lost and they had ceased to exist, for all purposes, with effect from 05.08.2010. After the merger, the power required by these units is actually the power required by ESIL only, which is a consumer of DGVCL. There was, therefore, no question of any breach of the conditions of the Minutes of the Meeting dated 01.02.2010.
26. Pursuant to the notice of DGVCL and the reply of Essar referred to above, a decision came to be taken by DGVCL, rejecting the contentions raised by ESIL and assessing the energy charges at Rs.2311,02,43,968/ for 202,09,92,000 KWH (168416000 KWH or 168.42 MV, as recorded in the meter into twelve) at twice the rate, as per the Minutes of the Meeting dated 01.02.2010, in respect of the period between 15.06.2011 to 30.07.2011.
27. Representations were made by Essar to various authorities, including DGVCL, against what it considered as an exorbitant and unjustified demand by DGVCL. Pursuant thereto, the Government of Gujarat constituted a Committee consisting of three members, being the Managing Director of GETCO, the Chief Page 20 of 112 C/SCA/5621/2014 CAV JUDGMENT Electrical Inspector and a Senior Technical Officer, to examine the entire issue having regard to the prevailing provisions of law, Minutes of Meeting and the effect of the amalgamation order of the High Court, to suggest a fair solution to the dispute. On 19.10.2011, Essar wrote to DGVCL requesting that the demand under the Supplementary Bills should be kept in abeyance pending the resolution of the dispute. On 25.10.2011, in response to the above letter of Essar, DGVCL stated that it was not possible to keep the Supplementary Bills in abeyance, or even to process the application for extension of the power boundary, until the amount of the supplementary bills was paid.
28. The Committee constituted by the Government of Gujarat gave its report on 13.12.2011, holding, inter alia, that Essar had taken unilateral action in changing the electrical connection and that Essar's contention that after the shifting of the Ichchhapor line, the Minutes of the Meeting dated 01.02.2010 would not be operative and the reverse power flow restriction would stand removed, was not acceptable and the Minutes of the Meeting dated 01.02.2010 would stand. It was further held that the total energy of Page 21 of 112 C/SCA/5621/2014 CAV JUDGMENT 168.416 MU on the second electric line would include power from the power plants and open access and, therefore, could not be stated to be DGVCL power. The Committee finally concluded that there was no theft of energy but a unilateral action was taken by Essar to overrule the reverse power relay restriction and that the whole matter of the supplementary bills rested on the fact of the use of unauthorized power outside the approved boundary of Essar Steel India Limited on the date of detection by DGVCL, as per the Minutes of the Meeting dated 01.02.2010.
29. On 05.01.2012, the Government of Gujarat wrote a letter to DGVCL, stating that upon careful examination of the findings and conclusions of the Committee, it was found that although Essar failed to inform the Power Utility about the modification made by it, the fact remains that there is no theft of electricity and full energy is accounted and paid for. Therefore, it is viewed that while deciding the issue of the supplementary bills raised by DGVCL, the conclusions drawn by the Committee constituted for the purpose, the provisions as contained under subsection (6) of Section126 of the Electricity Act, 2003, and the Page 22 of 112 C/SCA/5621/2014 CAV JUDGMENT instructions issued by the Government of India, Ministry of Power, vide their letter dated 30.11.2011, need to be examined. It was further stated in the said letter that keeping in view the overall industrial interest of the State, pending the final settlement of the claim by DGVCL, it is not prudent to hold (withhold) open access to Essar. DGVCL was, therefore, directed to apply the provisions of subsection (6) of Section126 of the Act and charge penalty at a rate equal to twice the tariff for electricity consumed till the case of the total claim was settled.
30. Pursuant to the aforesaid letter of the State Government, DGVCL issued two revised supplementary bills on 25.01.2012, for a total amount of Rs.192,58,53,664/ worked out as per the provisions of Section126(6) of the Act, till the total claim was finally settled.
31. On 12.03.2012, ESIL deposited 50% of the charges under the supplementary bills, under protest. The balance 50% was paid in installments, as recorded vide letter dated 28.03.2012. Delayed payment charges, as demanded by DGVCL, were also paid by Essar on various Page 23 of 112 C/SCA/5621/2014 CAV JUDGMENT dates.
32. On 17.04.2012, the request for the extension of the power boundary, made by Essar, was approved by DGVCL. On 14.05.2012, upon approval of the revised power boundary, DGVCL approved, by way of a stop gap arrangement, the same system adopted by Essar on 15.06.2011, closing the line isolator, thereby permitting reverse flow of energy from the BusBar through part of the second electric line and then through the underpass to the Essar Steel (Hazira) Limited.
33. On 19.11.2012, Essar preferred an appeal under Section127 of the Act, against the revised supplementary bills, before the Appellate Authority notified by the Government of Gujarat, under the Appeal to the Appellate Authority Rules, 2004, as amended in 2006. On 12.12.2012, preliminary objections were raised by DGVCL to the maintainability of the appeal under Section127 of the Act. On 28.05.2013, a Written Statement was filed by DGVCL, whereas Essar filed its Written Submissions on 18.08.2013, before the Appellate Authority.
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34. By the impugned order dated 01.11.2013, passed by the Appellate Authority, it has been held, interalia, that during the relevant period from 15.06.2011 to 30.07.2011, ESIL had consumed total power of 637.26 MU within the authorized and unauthorized premises, out of which its own generation was 470.52 MU. Power totalling 141.51 MU was purchased from GUVNL under open access and 25.23 MU were supplied by DGVCL as per SLDC data. It was held by the Appellate Authority that the supplementary bills issued by DGVCL could be considered as raised for unauthorized use of electricity by the consumer in the area or premises not authorized by the Licencee and the claim raised on the basis of unauthorized use of 168.42 MU was unreasonable, unjustified and contrary to the provisions contained in Section126 of the Act, and has to be revised to 25.23 MU. Since the consumer had paid the full amount of the supplementary bill, the balance amount was liable to be refunded to it. Being aggrieved by the aforesaid order, DGVCL has preferred the lead petition and ESIL has preferred the cross petition, challenging that portion of the order that Page 25 of 112 C/SCA/5621/2014 CAV JUDGMENT holds that 25.23 MU of electricity has been unauthorizedly used by it.
35. In the above background, learned Senior Counsel for the respective parties have made detailed and elaborate submissions, the gist of which is recorded hereinbelow.
SUBMISSIONS OF RESPECTIVE PARTIES IN SCA No.2859/2014 (lead petition):
36. Mr.Mihir J. Thakore, learned Senior Advocate for the petitionerDGVCL has submitted that :
(i) The appeal preferred by ESIL against the revised supplementary bills issued by DGVCL, purportedly under Section126 of the Act, is not competent, as the said bills were issued pursuant to the directive of the State Government and, therefore, it cannot be considered to be a final order under Section 126 of the Act. The supplementary bills were a result of a computation method adopted as an adhoc arrangement and there was no finality attached to it. The procedure envisaged under Page 26 of 112 C/SCA/5621/2014 CAV JUDGMENT Section126 of the Act has never been followed and there was no provisional assessment or a final order. As the supplementary bills were not issued after following the provisions of Section126 of the Act, no appeal against them is maintainable under Section127 of Act. Even if it is assumed that an appeal could have been preferred, and without prejudice to the above submissions, such appeal is barred by limitation, on the date of its presentation.
The provisions of Section127(1) prescribe that an appeal may be filed within thirty days of the order. In the present case, the appeal was preferred on 19.11.2012, challenging the bills dated 25.01.2012, almost after ten months, which is much beyond the prescribed period of limitation. This contention was specifically raised before the Appellate Authority but has been erroneously rejected by the impugned order. The Appellate Authority, therefore, had no jurisdiction to decide the appeal preferred by ESIL.
(ii)In support of the above contention, reliance is Page 27 of 112 C/SCA/5621/2014 CAV JUDGMENT placed upon the following judgments :
(i) Chhattisgarh State Electricity Board Vs. Central Electricity Regulatory Commission and others, reported in (2010) 5 SCC 23.
(ii) Draupadi Devi and others Vs. Union of India and others, reported in (2004) 11 SCC 425.
(iii)Kamlesh Babu and others Vs. Lajpat Rai Sharma and others, reported in (2008) 12 SCC
577.
(iii) Without prejudice to the above, the same Chief Electrical Inspector who was appointed on the Committee by the State Government has passed the impugned order, which could not have been done by him. There is total lack of jurisdiction and competence in the Appellate Authority, namely, the Chief Electrical Inspector. For the above reasons, a Writ of Certiorari would lie to quash and set aside the impugned order dated 01.11.2013.
(iv)There is a clear breach of the Agreement reached vide the Minutes of Meeting dated 01.02.2010 by ESIL, entitling DGVCL to recover, in terms of the said Agreement, charges for the Page 28 of 112 C/SCA/5621/2014 CAV JUDGMENT period during which the second Tie Line was connected to the grid, allowing power from the grid to go to the other units of Essar Group which were not consumers of DGVCL. Pending any decision of making the other units of Essar Group consumers by revising the power boundary without intimation or permission, Essar Group connected the second Tie Line to the grid on 15.06.2011. On that very day they wrote a letter for revising the power boundary. The other units of Essar Group were not consumers of DGVCL and only ESIL was a consumer.
Therefore, the nonconsumer units were not entitled to any power through the grid, whether the power was DGVCL power or Open Access power. It was found by the Field Officer of DGVCL on 01.07.2011, after scrutinizing MRI data of the apex meter of the Tie Line2, that power had been flowing from the GETCO grid to Tie Line2 from 17.00 hours on 15.06.2011. DGVCL addressed a letter dated 26.07.2011 to ESIL, indicating that there was a clear breach of the Agreement dated 01.02.2010, entitling DGVCL to recover Page 29 of 112 C/SCA/5621/2014 CAV JUDGMENT charges at the rate of twelve times the quantity found to have been utilized at twice the normal rate (HTP1) of DGVCL, as per Condition No.2(2) of the Minutes of the Meeting dated 01.02.2010. It is clearly recorded in the said Minutes of the Meeting that in case of any power is found recorded in the meters to be placed on both the Tie Lines of Bhander Power Limited, the power would be treated as DGVCL power. Accordingly, a supplementary bill computed as per the above Agreement with effect from 15.06.2011 to 30.07.2011, amounting to Rs.2311 Crores approximately, was rightly issued to ESIL on 22.09.2011. The breach has been admitted by ESIL in its letter dated 26.09.2011 and has also been remedied thereafter.
(v) The amalgamation of other units of the Essar Group which were not consumers of DGVCL with ESIL, which was a consumer, does not result in all the merged units becoming consumers of DGVCL. The legal entity, even after becoming one, does not become one consumer as a consumer Page 30 of 112 C/SCA/5621/2014 CAV JUDGMENT has no relation to the legal entity, but has relation to the premises. Amalgamation would not result in the premises of the merged units becoming the same. They would continue to remain separate premises with a different connection and meter. Therefore, they cannot be construed as being a single consumer after the merger. It is not a mere case of extension of power boundary, as the other units were not consumers of DGVCL. Only the consumer is entitled for the extension of the power boundary. Unless they are consumers, the units are not entitled to receive power through Open Access utilizing the transmission lines of GETCO or the distribution line of DGVCL. Taking the Court through the definitions of "consumer", "Distribution Licencee", "Franchisee", "Licence", "Licencee", "supply", "transmission lines" etc. as given under the Act as well as the provisions of Sections39, 40 and 42 thereof, it is further submitted by the learned Senior Counsel that from the above provisions it is clear that only a consumer is Page 31 of 112 C/SCA/5621/2014 CAV JUDGMENT entitled to receive power from a Distribution Licencee like DGVCL, or even through the Open Access through the transmission line of GETCO/DGVCL. The erstwhile unit of ESIL, being the consumer, was only entitled to receive power not only from DGVCL, but also through Open Access, subject to payment of wheeling charges. The other units of the Essar Group were not entitled to receive any such power since they are not the consumers of DGVCL. That, in spite of amalgamation, reverse power relay was placed on Tie Line1 in July, 2010 and was tested on 10.07.2010, which clearly shows that even Essar never understood that amalgamation would absolve them of laying down the reverse power relay on Tie Line1 and isolating Tie Line2 from the grid which was supplying power to the other units of Essar Group.
In support of the above submissions, the learned Senior Counsel has relied upon the judgment in the case of Singer India Ltd. Vs. Chander Mohan Page 32 of 112 C/SCA/5621/2014 CAV JUDGMENT Chadha, reported in (2004) 7 SCC 1.
(vi) The present is a clear case of breach of Agreement contained in the Minutes of Meeting dated 01.02.2010 on the part of ESIL. The recovery is sought in terms of the said Agreement, therefore, it is a claim in contract. Such a claim is not prohibited under the Electricity Act, 2003, as there is no provision in the Act indicating that such a contract is void. The contract has been entered into for consideration, which is the benefit of nonpayment of wheeling charges. It is an agreed provision under the contract for liquidated damages between the parties and is not a provision in terrorem. As the agreement reflects the intention of the parties and any breach of the agreement would invite the consequences agreed upon, which is penal charges at the rate of twelve times the quantity of power found to have been recorded at twice the normal rate (HTP1) of DGVCL. As it is a case of breach of agreement, the provisions of Section126 of the Act could not Page 33 of 112 C/SCA/5621/2014 CAV JUDGMENT have been resorted to by ESIL.
In support of the above submission, reliance is placed on the judgment in the case of Oil and Natural Gas Corporation Limited Vs. Saw Pipes Limited, reported in (2003) 5 SCC 705.
(vii) The decision of the Committee of the State Government and the directives issued by it upon DGVCL, to treat the proceedings as per the provisions of Section126 of the Act is only by way of an interim arrangement and is not a binding command on DGVCL. This is clear from the letter dated 05.01.2012 of the State Government, which states that this arrangement is for the time being, till the case of the total claim is settled. This means that the bill dated 22.09.2011 for Rs.2311 Crores approximately, was not a provisional bill under Section126 of the Act and was not issued by any Assessing Officer. No opportunity of hearing was given by the Assessing Officer after the issuance of the said bill. This would further mean that the revised supplementary Page 34 of 112 C/SCA/5621/2014 CAV JUDGMENT bill dated 25.01.2012 is not a final order of assessment after granting an opportunity of hearing to Essar, but is only an interim arrangement. All these above aspects have been overlooked by the Appellate Authority while passing the impugned order. Hence, the said order deserves to be quashed and set aside.
37. Opposing the contentions raised on behalf of the petitioner, Mihir H. Joshi, learned Senior Advocate for respondent No.1ESIL has submitted as below :
(i) That the appeal preferred by DGVCL against the revised supplementary bills is maintainable under Section127 of the Act, as it is a case of unauthorized supply of electricity beyond the power boundary, which would fall under the provisions of Section126 of the Act. It is not a mere dispute under the Minutes of the Meeting dated 01.02.2010, as what was prohibited in the said Minutes was the supply of power to an entity which was not a consumer. On the facts of the case, on account of the amalgamation of the units of the Essar Group, there was no Page 35 of 112 C/SCA/5621/2014 CAV JUDGMENT other entity or consumer except ESIL. The Minutes of the Meeting dated 01.02.2010, recorded the decisions taken by the authorities on the issues raised therein. There is sufficient indication in the Minutes of Meeting that the same are to be read in conjunction with, and in the context of, the statutory provisions and are not intended to supplant or substitute the provisions of Act. It is mentioned in the Minutes that a solution is to be found "within the framework of regulations", which indicates that the Minutes are not outside the framework of the Act, but aim at finding a solution within the scope and ambit of the statute.
(ii) In any case, DGVCL is a Distribution Licencee as contemplated under PartIV of the Act, read with the provisions of the Gujarat Electricity Regulatory Commission (Distribution Licence) Regulation, 2005. The provisions of the Act read with the Regulations mandate that its action must be in compliance of the provisions of the Act. It is impermissible for DGVCL to Page 36 of 112 C/SCA/5621/2014 CAV JUDGMENT contend that it seeks to exercise power under the Minutes of Meeting, dehors the provisions of the Act. DGVCL is "State" within the meaning of Article12 of the Constitution of India. It has to function under the statute, that is, the Electricity Act, 2003, and the regulations framed thereunder. It cannot claim to enforce a contract that is dehors the provisions of the statute. The provisions of the statute/regulations would override all existing contracts. If an Agreement is dehors the provisions of the Act, it cannot be enforced, except by filing a Civil Suit, which is barred under the provisions of the Act. Being "State"
under Article12 of the Constitution of India, the action of DGVCL would have to be tested on the touchstone of Article14. The question would arise whether this Court, under its equitable jurisdiction, would uphold the demand of DGVCL much beyond the statute, which is arbitrary, disproportionate and excessive. In support of this submission, reliance is placed upon the judgment in PTC India Limited Vs. Page 37 of 112 C/SCA/5621/2014 CAV JUDGMENT Central Electricity Regulatory Commission, Through Secretary, reported in (2010) 4 SCC
603.
(iii) Explanation(b) of Section126(6) of the Act defines "unauthorized use of electricity" and the event of default contemplated under the Minutes of Meeting, namely flow of DGVCL power through the 220 KV integrated grid to member units of Bhander Power Limited, is considered to be unauthorized use of electricity and, therefore, not outside the ambit of Section126 of the Act. The disputes would, therefore, necessarily have to be determined and adjudicated under Sections126 and 127 of the Act, particularly since the jurisdiction of the Civil Court is barred under Section145 of the Act. The substance of the dispute, namely, whether there is any unauthorized use of electricity and the nature of the unauthorized use, can only be adjudicated under the Act. There is no other mechanism for adjudication of such a dispute for unauthorized use of electricity and only the statutory authority Page 38 of 112 C/SCA/5621/2014 CAV JUDGMENT can determine the dispute. The Minutes of Meeting dated 01.02.2010, in no way, detract from this premise and do not lay down any alternative procedure for dispute resolution. DGVCL has all along accepted the State Government's interpretation that the dispute should be resolved under Section126 of the Act. Even if the authority would hold that there has been an unauthorized use of electricity, until the same is contemplated in the meeting, DGVCL would not be entitled to claim penal rates under the Minutes but would only be entitled to claim an amount contemplated under Section126 of the Act. In any event, the determination of unauthorized use of electricity can only be made under Sections126 and 127 of the Act and the consequential quantification would depend on the nature of the unauthorized use for which no separate adjudication would be necessary, assuming the legality of the penal rate under the Minutes. DGVCL is estopped from raising such a contention as the State Government has Page 39 of 112 C/SCA/5621/2014 CAV JUDGMENT categorically directed that Section126 applies to the facts of the case and such decision is binding upon it. DGVCL has, at no point of time, objected to the application of Section 126 of the Act but has acquiesced in the same by acting upon the directions of the State Government and issuing the revised supplementary bills as per Section126(6) of the Act, on 25.01.2012.
(iv) The contention of DGVCL that the procedure under Section126 of the Act has not been followed is misconceived, since a provisional assessment was proposed/made upon ESIL upon inspection of its premises on 21.07.2011, and by the issuance of a Show Cause Notice dated 26.07.2011. Objections have been filed by ESIL to the same, vide letters dated 29.07.2011 and 08.09.2011 and a final decision has been taken vide order dated 22.09.2011, by issuing two revised supplementary bills upon ESIL. This, in substance, is the procedure contemplated under Section126 of the Act. Therefore, the appeal preferred by ESIL cannot be said to premature Page 40 of 112 C/SCA/5621/2014 CAV JUDGMENT or not competent.
(v) It is impermissible, unreasonable and inequitable for DGVCL to contend that the amount under the supplementary bills is recoverable but the remedy of appeal is not available to the consumer and that too on the premise that DGVCL, being the Distribution Licencee, has itself not followed the procedure contemplated under the Act.
(vi) The contention of DGVCL that the revised supplementary bills are not final bills and, therefore, the appeal under Section127 of the Act is not competent, is without substance. The revised supplementary bills are in respect of the entire quantity of electricity recorded in the meter on the second Tie Line, namely for 168.42 MU. On the question of unauthorized use of electricity and its assessment, ESIL submitted its objections and a final order has been passed by DGVCL to the effect that there has, in fact, been unauthorized use of electricity, as contemplated under the Minutes Page 41 of 112 C/SCA/5621/2014 CAV JUDGMENT of Meeting. The decision/ order is final in the manner contemplated under Section126(3) of the Act. An appeal is provided to the Appellate Authority against such a final order, which has been preferred by ESIL. By deposit of the amount of the revised supplementary bills, the condition of predeposit under Section127(2) of the Act has been complied with and the appeal is clearly maintainable.
(vii) Responding to the contention regarding the appeal being beyond the period of limitation, it is submitted on behalf of ESIL that in Chhattisgarh State Electricity Board Vs. Central Electricity Regulatory Commission and others (Supra.), relied upon by DGVCL, the Supreme Court was dealing with a case under Section125 of the Act. Section125 of the Act is couched in language different from that of Section127(1) of the Act. The language of Section127(1) does not debar the applicability of the Limitation Act, as there are no words to the effect that "no appeal shall be entertained after the period of thirty days". Under Page 42 of 112 C/SCA/5621/2014 CAV JUDGMENT Section125 of the Act, the Limitation Act is excluded by necessary implication which is clear from the proviso, whereas, the language of Section127(1) does not debar the provisions of the Limitation Act. The judgment cited on behalf of DGVCL, therefore, cannot be made applicable to the present case.
The contention regarding limitation was not raised before the Appellate Authority which had no occasion to deal with the same. Though it is a legal question and if DGVCL really had a serious objection, it would definitely have raised it before the Appellate Authority and got a determination on this point as well. In support of the above contention, reliance is placed upon a judgment in Mukri Gopalan Vs. Cheppilat Puthanpurayil Aboobacker, reported in (1995) 5 SCC 5.
(viii) Regarding the contention raised on behalf of DGVCL that the Chief Electrical Inspector, being a member of the Government Committee has passed the impugned order, it is submitted that Page 43 of 112 C/SCA/5621/2014 CAV JUDGMENT the Committees have not arrived at any conclusions on merits regarding the unauthorized use of electricity without extension of the power boundary, or regarding the issue of the merged units being consumers of DGVCL, which are the principal issues involved. This objection was never raised before the Appellate Authority. Even otherwise, no allegation of bias or malafides has been made against the Appellate Authority. The Chief Electrical Inspector has been appointed as the Appellate Authority by virtue of a Notification, under the Rules. Malice has to be specifically pleaded and proved, which has not been done by DGVCL. On the contrary, DGVCL participated in the proceedings before the Appellate Authority without raising any objections. Hence, this contention cannot be permitted to stand.
(ix) In support of this submission, reliance has been placed upon a judgment in State Bank of India Vs. Ram Das and another, reported in (2003) 12 SCC 474.
Page 44 of 112 C/SCA/5621/2014 CAV JUDGMENT
(x) The Scheme of Amalgamation, was sanctioned on 30.06.2010 and became effective with effect from 05.08.2010. The consequential legal effect would be that Essar Steel (Hazira) Limited, as the Transferor entity, stood merged with the Transferee entity, namely ESIL, and ceased to have any legal existence, whatsoever. Therefore, on the date of the purported event of default on 15.06.2011, there was no supply of DGVCL power to a member unit, since it had ceased to exist and stood merged with the consumer, ESIL. Consequently, the event of default, as contemplated under the Minutes of the Meeting dated 01.02.2010, cannot be said to have occurred at all.
(xi) The contention that the electrical energy supplied to the premises of the erstwhile Essar Steel (Hariza) Limited, is to a nonconsumer, thereby triggering the default clause under the Minutes, is misplaced and misconceived. In the first place, the event of default under the Minutes does not cover flowing of DGVCL power Page 45 of 112 C/SCA/5621/2014 CAV JUDGMENT to ESIL, but to member units. Secondly, the erstwhile unit of ESIL has chosen to remain as ESIL and within the same complex. Thirdly, this contention is completely academic and hypothetical since subsequently, DGVCL has merely extended the power boundary of ESIL covering the area of the erstwhile unit of Essar Steel (Hazira) Limited, and has not granted a separate connection for the said premises, which completely belies the contention being raised by DGVCL. Therefore, there is no event of default as contemplated under the Minutes of Meeting.
(xii) In support of the above contention, reliance has been placed upon a judgment in the case of Singer India Limited Vs. Chander Mohan Chadha and others, reported in (2004) 7 SCC 1.
(xiii) DGVCL is estopped from contending that the default was anything other than a breach of the power boundary. DGVCL has itself treated the extension of the power boundary granted by letter dated 17.04.2012, as the remedial Page 46 of 112 C/SCA/5621/2014 CAV JUDGMENT measure, and approved the very action undertaken by ESIL on 15.06.2011, vide its letter dated 14.05.2012. The State Government has concluded that the issue related to the breach of the power boundary, vide Report of the Committee dated 13.12.2011. The decision of the State Government dated 05.01.2012, has been accepted by DGVCL vide letter dated 25.01.2012. The only issue sought to be kept open by DGVCL was in relation to the quantification of the claim and not the event of default. Once the event of default is not the one contemplated under the Minutes of Meeting dated 01.02.2010, the adjudication of the issue would undoubtedly have to be under the provisions of the Act, without prejudice to the contention of ESIL that the Minutes cannot be read dehors the provisions of the Act and even a default thereunder would have to be adjudicated as per the provisions of the Act.
(xiv) The default is not the one contemplated under the Minutes of Meeting, therefore, DGVCL cannot take recourse of the penal rate provided for Page 47 of 112 C/SCA/5621/2014 CAV JUDGMENT that purpose in the Minutes. Even if the default is considered as one contemplated under the Minutes of the Meeting dated 01.02.2010, DGVCL is not entitled to levy any claim, penal rate stipulated in the Minutes, as the Show Cause Notice dated 26.07.2011 issued by DGVCL, expressly permits ESIL to restore the position prevailing prior to 15.06.2011, failing which a quantum of power merged from the grid would be charged as per the Minutes of the Meeting. ESIL, having forthwith restored the position as confirmed by letter dated 30.07.2011, the directions of DGVCL stood complied with and there being no fault in compliance, DGVCL on its own proceeded to levy the penal rate submitted in the meeting.
(xv) DGVCL, by its own inaction, brought about a situation in which the respondent was compelled to undertake the action of removing the reverse power relay, essentially to prevent tripping of electrical energy and consequential damage to its machinery, which action has not benefitted ESIl or adversely affected DGVCL. ESIL had Page 48 of 112 C/SCA/5621/2014 CAV JUDGMENT requested DGVCL to remove the reverse power relay in view of subsequent developments, interalia, vide letters dated 21.05.2011 and 08.06.2011. Even GETCO had directed DGVCL to remove the power flow relay on 04.06.2011, which was not followed up or acted upon by DGVCL, which is bound to act in accordance with the directions of GETCO.
(xvi) That the findings and conclusions arrived at by the Appellate Authority in the impugned order, have not been demonstrated to be converse, perverse or without jurisdiction. Cogent reasons have been given by the Appellate Authority in support of the findings, except to the extent that the findings that are against ESIL. Hence, to the extent that the impugned order is favourable to ESIL, the contentions raised by DGVCL deserve to be rejected and the impugned order, to that extent, deserves to be confirmed.
38. Mr.S.N.Shelat, learned Senior Advocate has appeared for respondent No.1ESIL in the main petition Page 49 of 112 C/SCA/5621/2014 CAV JUDGMENT and has supplemented the submissions advanced by Mr.Mihir H. Joshi, learned Senior Advocate.
39. It is submitted by Mr.Shelat, learned Senior Advocate, that much reliance is placed by DGVCL upon the Minutes of Meeting dated 01.02.2010, especially Clause2(2) thereof. This clause is a clause in terrorem, inserted with an intention to deter the party from committing a breach. In such a situation, it is settled law that the Court has jurisdiction to determine what can be the penal amount. The Court has to find out the real purpose for which the stipulation was incorporated in the contract. By reason of it being burdensome and oppressive in character, it operates in terrorem so as to drive the consumer to fulfil the contract.
40. In support of this contention, reliance is placed upon the judgment in K.P.Subbarama Sastri and others Vs. K.S.Raghavan and others, reported in AIR 1987 SC 1257.
41. The representatives of DGVCL and ESIL, in the presence of Expert members, have come to the Page 50 of 112 C/SCA/5621/2014 CAV JUDGMENT conclusion that the amount under the Agreement cannot be dehors the provisions of Section126 of the Act and that DGVCL should charge as per the computation provided under the said provision of law. However, it is left open to DGVCL to get a final adjudication, if so desired, from the Competent Authority. In view of the above, the appeal under Section127 of the Act is maintainable and DGVCL has been rightly directed by the Appellate Authority to charge only for the energy consumed. After the issuance of the bill for Rs.2311,02,43,968/ on 22.09.2011, the State Government intervened and a meeting of the representatives of Essar and DGVCL as well as Technical Expert was convened. The Committee clearly concluded that there was no theft of energy and full energy charges have been paid. It is not disputed by DGVCL that the State Government is competent to give directions to determine the matter as per the provisions of Section126 of the Act. The State Government has taken a decision on the recommendations of the Committee and DGVCL has accepted the decision and charged penalty as per the provisions of Section 126(6) of the Act. It was kept open for DGVCL to get Page 51 of 112 C/SCA/5621/2014 CAV JUDGMENT the final adjudication as regards the penalty from the Competent Authority, but so far it has not invoked any provisions of the Act nor instituted any suit, as on date. In view of the above, ESIL is justified in law in approaching the Appellate Authority under Section 127 of the Act.
SUBMISSIONS IN SCA No.5494/2014 (Cross petition):
42. Insofar as the crosspetition (Special Civil Application No.5494/2014) is concerned, the petitioner in this petition is ESIL, which has challenged the order of the Appellate Authority dated 01.11.2013, to the extent that it holds that ESIL has unauthorizedly used 25.23 MU of power and is liable to pay penal charges for the said quantity of power, as provided under Section126 of the Act.
43. It is submitted by Mr.Mihir H. Joshi, learned Senior Advocate for ESIL that there is no unauthorized use of power by ESIL, as the units have merged after the order of amalgamation. Even if it is assumed that there is an unauthorized use of power, it can be said that only 6.63 MU, which has gone into the merged Page 52 of 112 C/SCA/5621/2014 CAV JUDGMENT units can be stated to be unauthorized. The order of the Appellate Authority, to this extent, is required to be interfered with. Mr.Mihir Thakore, learned Senior Advocate for DGVCL has maintained the same stand as adopted by him in the lead matter.
SCA No.5621/2014 :
44. Special Civil Application No.5621/2014 is essentially preferred for the amount of refund given to the petitioner by the order dated 01.11.2013 passed by the Competent Authority with a view to see that no coercive action be taken against it in matters that are not specifically related to the controversy involved in the main petition and the crosspetition. The fate of this petition would, therefore, depend upon the decision in the other two petitions. The submissions on behalf of the learned Senior Counsel for the respective parties are also to this effect.
EVALUATION OF RIVAL SUBMISSIONS :
Maintainability of the appeal :
This Court has heard learned Senior Counsel for the respective parties at length and examined the Page 53 of 112 C/SCA/5621/2014 CAV JUDGMENT material on record.
45. In the above factual and legal background, this Court would now proceed to deal with the submissions advanced by the rival parties.
46. It has been strenuously urged by Mr.Mihir J. Thakore, learned Senior Advocate on behalf of the petitionerDGVCL in the lead matter, that the appeal preferred by Essar against the revised supplementary bills dated 25.01.2012, amounting to Rs.192,58,53,664/, is not competent or maintainable under Sections126 and 127 of the Act, for the reason that the revised supplementary bills were issued on the directive of the State Government and not after following the procedure envisaged under Section126 of the Act. It has further been contended that the said bills cannot be construed to be the result of a final order of assessment made by an Assessing officer under Section126 of the Act, therefore, no appeal under Section127 of the Act would lie. It is further contended that even assuming that the appeal is maintainable, it could not have been entertained by the Appellate Authority, as it has been filed beyond Page 54 of 112 C/SCA/5621/2014 CAV JUDGMENT the prescribed period of limitation.
47. On the other hand, Mr.Mihir H. Joshi, learned Senior Advocate for Essar has submitted that the dispute pertains to the unauthorized supply of electricity beyond the power boundary and any dispute regarding unauthorized use of electricity, that is, utilization of electricity outside the authorized area, would fall within the ambit and scope of Section126 of the Act. Therefore, the appeal under Section127 of the Act is competent and maintainable. It is further contended on behalf of ESIL that DGVCL has itself issued the revised supplementary bills on the basis of Section126 of the Act, without raising any objections, whatsoever. Having done so, it cannot now contend that no appeal would lie against their own action, taken under Section126 of the statute.
48. To examine the rival contentions, it would be pertinent to refer to the Minutes of Meeting dated 01.02.2010, the factual background, prevailing situation and surrounding circumstances, within which the Minutes have been drawn. From the material on Page 55 of 112 C/SCA/5621/2014 CAV JUDGMENT record, it is evident that the Minutes were necessitated on account of pending disputes, the principal one being the claim of GETCO for wheeling charges.
49. The first issue in dispute, as recorded in the Minutes of Meeting dated 01.02.2010, is as under :
"Essar represented that they wanted to resolve the issue of wheeling of power through the 220 KV integrated network from Bhander Power to Essar Steel Limited with an alternative route of shifting of line, so that grid connectivity of GETCO becomes isolated and radial from Essar Steel and Bhander Power Ltd. thereby GETCO power flow is direct from Ichhpore to Sachin."
This was proposed by Essar, to avoid wheeling charges. After detailed discussion, it was decided that Essar would give an undertaking to GETCO for the payment of transmission charges as per the final decision by a Court of law in the matter. It was further decided that GETCO would approve the shifting of the Ichchhapor line so that the power would flow one side of the BusBar for resolution of the wheeling issue and the cost of shifting and the equipments Page 56 of 112 C/SCA/5621/2014 CAV JUDGMENT proposed to be installed, would be borne by Essar. Essar would also give an undertaking for handing over the property to GETCO. The decision on the issue of shifting of the line, taken in the Minutes of Meeting, is as follows :
"Without prejudice to the outcome of the case with regard to Transmission Charges pending with any judicial authority pertaining to this matter, Essar, immediately upon signing of this Minutes of Meeting will apply for necessary approval to GERC on the basis of this Minutes of Meeting and GUVNL & GETCO will support shifting of line before GERC as permanent resolution so that wheeling will not be payable thereafter from the date of actual completion of the shifting of lines subject to final approval of GERC."
50. The second issue in dispute discussed in the Minutes of Meeting, was regarding the supply of power to group companies. Regarding this issue, it is stated in the Minutes of Meeting as below :
"As the issue is pending for long time, the Principal Secretary, Energy and Petrochemicals Department suggested to arrive at amicable solution within the frame work of regulation."
51. After resolving that the Chief Electrical Page 57 of 112 C/SCA/5621/2014 CAV JUDGMENT Inspector would approve the electrical drawings to all member units of Essar, it was agreed in Clause2 of the Minutes of Meeting as under :
"2. In the second phase all member units want to avail Bhander Power. GUVNL and GETCO stated that all units have to become DGVCL consumers or alternatively all 220 KV and 33 KV connectivity to units shall run in isolation of 220 KV integrated grid and DGVCL connection of Contract Demand. Essar proposed reverse power flow relay so that at no point of time DGVCL power through 220 KV integrated grid will flow to member units. Detailed modalities for operation of Reverse Power Relay and related issues were discussed and agreed upon. GETCO and DGVCL shall have a discussion with the supplier for sealing, locking location and the scheme of operation of reverse power relay arrangement. Essar agreed for the same."
52. In the context of preventing power from flowing through the 220 KV integrated grid to member units of Essar, which were not the consumers of DGVCL, and as a penal measure, the following Clause2.2 was inserted :
"In case any power flow/unit (KwH) is found recorded in the meters to be placed on both the tie lines of Bhander Power Ltd. the power consumed will be treated as DGVCL power and the Page 58 of 112 C/SCA/5621/2014 CAV JUDGMENT power imported from the grid, same will be charged at the rate of 12 times quantity found to have been utilized at twice the normal rate (HTP
1) of DGVCL. For this power will be metered at tieline."
53. The second issue, therefore, was that of shifting of lines and supply of power to Group companies. The Minutes of the Meeting are clear that an amicable solution is arrived at within the framework of regulations, meaning thereby, not dehors the statute and regulations. The penal clause has been inserted in the event a default is committed by Essar, if it is found that power is flowing through the 220 KV integrated grid to its nonconsumer member units. In such an eventuality, the power consumed would be treated as DGVCL power, for all intents and purposes. The event of default, therefore, was in respect of consumption of power by a member unit, which was not a consumer of DGVCL. The issue was thus discussed and resolved in the Minutes of Meeting dated 01.02.2010.
54. What constitutes unauthorized use of electricity can be guaged from the provisions of Section126 of the Act, which are reproduced hereinbelow :
"126. Assessment - (1) If on an inspection of Page 59 of 112 C/SCA/5621/2014 CAV JUDGMENT any place or premises or after inspection of the equipments, gadgets, machines, devices found connected or used, or after inspection of records maintained by any person, the assessing officer comes to the conclusion that such person is indulging in unauthorized use of electricity, he shall provisionally assess to the best of his judgment the electricity charges payable by such person or by any other person benefited by such use.
(2) The order of provisional assessment shall be served upon the person in occupation or possession or in charge of the place or premises in such manner as may be prescribed.
(3) The person, on whom an order has been served under subsection (2), shall be entitled to file objections, if any, against the provisional assessment before the assessing officer, who shall, after affording a reasonable opportunity of hearing to such person, pass a final order of assessment within thirty days from the date of service of such order of provisional assessment, of the electricity charges payable by such person.
(4) Any person served with the order of provisional assessment may, accept such assessment and deposit the assessed amount with the licensee within seven days of service of such provisional assessment order upon him. (5) If the assessing officer reaches to the conclusion that unauthorized use of electricity Page 60 of 112 C/SCA/5621/2014 CAV JUDGMENT has taken place, the assessment shall be made for the entire period during which such unauthorized use of electricity has taken place and if, however, the period during which such unauthorized use of electricity has taken place cannot be ascertained, such period shall be limited to a period of twelve months immediately preceding the date of inspection.
(6) The assessment under this section shall be made at a rate equal to [twice] the tariff applicable for the relevant category of services specified in subsection (5).
Explanation - For the purpose of this section,
(a) "assessing officer" means an officer of a State Government or Board or licensee, as the case may be, designated as such by the State Government;
(b) "unauthorised use of electricity" means the usage of electricity
(i) by any artificial means; or
(ii) by a means not authorized by the concerned person or authority or licensee; or
(iii) through a tampered meter; or
(iv) for the purpose other than for which the usage of electricity was authorized; or
(v) for the premises or areas other than those for which the supply of electricity was authorized." (emphasis supplied)
55. Viewed in the context of the above definition of Page 61 of 112 C/SCA/5621/2014 CAV JUDGMENT unauthorized use of electricity as clarified in the explanation to Section126, it can be said that the event of default contemplated under the Minutes of Meeting, namely flow of DGVCL power through the integrated grid to a nonconsumer member unit of Bhander Power Limited, is to be considered as an unauthorized use of electricity; especially as it pertains to premises or areas other than those for which the supply of electricity was authorized [Explanation(b)(v)]. This unauthorized use of electricity would, therefore, fall within the scope and ambit of Section126 of the Act.
56. DGVCL is a Distribution Licencee as contemplated under PartIV of the Act, read with the Gujarat Electricity Regulatory Commission (Distribution Licence) Regulations, 2005, including Regulation32. It, therefore, necessarily functions under, and in accordance with, the provisions of the Act and the Regulations in vogue. All actions of DGVCL, as a Distribution Licencee, would, therefore, necessarily be governed by the provisions of the statute and the regulations. If any action is to be taken regarding Page 62 of 112 C/SCA/5621/2014 CAV JUDGMENT unauthorized use of electricity, it is bound to be taken within the ambit and scope of the statute and not dehors thereof. The Minutes of Meeting dated 01.02.2010 have to be viewed in the context in which they were drawn, which has already been discussed earlier. Clause2.2, which can be stated to be the penal clause in the Minutes, cannot be resorted to as it is, dehors the provisions of the statute by DGVCL. In this context it is necessary to take into consideration subsequent events, namely, the directions of the State Government to treat the matter as per the provisions of subsection (6) of Section 126 and the action of DGVCL itself, in issuing the revised supplementary bills as per the formula contained in Section126(6), without any objection, protest or murmur.
57. Another significant event that occurred subsequent to the Minutes of Meeting dated 01.02.2010, was the sanctioning of the Scheme of Amalgamation between Essar Steel Limited, Essar Steel (Hazira) Limited, Hazira Plate Limited, Hazira Pipe Mill Limited and Essar Steel Orissa Limited, by the High Page 63 of 112 C/SCA/5621/2014 CAV JUDGMENT Court, vide order dated 30.06.2010. Essar addressed a letter dated 21.05.2011 to GETCO, recording that the Scheme of Amalgamation had been sanctioned and become effective from 05.08.2010, therefore, the units/companies covered under the Scheme, having merged into ESIL, an existing consumer of DGVCL, the contract demand of ESIL would automatically cover the supply of power to the units of the merged entities and the reverse power flow relay should be removed. Vide letter dated 04.06.2011, GETCO informed ESIL that the details of the amalgamation should be submitted to DGVCL for confirmation and after verification and personal inspection at the site, the reverse power flow could be removed. On the same day, GETCO directed DGVCL to take steps for the removal of the reverse power flow relay. Thereafter, on 08.06.2011, ESIL addressed a letter to DGVCL for the removal of the reverse power flow relay as, according to it, there was a problem of frequent line tripping and low utilization of the additional power of 200 MW purchased from GUVNL, vide an Agreement dated 13.05.2011 under open access.
Page 64 of 112 C/SCA/5621/2014 CAV JUDGMENT
58. It is an admitted fact that with effect from 15.06.2011, the reverse power flow relay system was unilaterally removed by Essar. A notice was issued by DGVCL to ESIL, to the effect that there was a breach of condition No.2.2 of the Minutes of Meeting dated 01.02.2010 and it was proposed that an amount calculated at twelve times the quantity of power found to have been utilized, at twice the normal rate of DGVCL, should be recovered unless the position prevailing before 15.06.2011 was restored. Essar replied by letter dated 29.07.2011, agreeing to restore the original position prior to 15.06.2011. In the meanwhile, it had also requested that the application for extension of the power boundary, already made by it, be expedited.
59. Pursuant to the notice of DGVCL, a bill dated 22.09.2011 was issued by DGVCL for an amount of Rs.2311,02,43,968/ for 202,09,92,000 units, calculating energy charges as per the Minutes of Meeting dated 01.02.2010. Pursuant to representations made by Essar to several authorities, the State Government constituted a Committee consisting of three members, to examine the entire issue, having regard to Page 65 of 112 C/SCA/5621/2014 CAV JUDGMENT the provisions of law, Minutes of Meeting and the effect of the amalgamation order and to suggest a fair resolution of the issue. The Committee held, vide its report dated 13.12.2011, that there was no theft of energy but a unilateral action had been taken by Essar to overrule the restrictions and that the whole matter of the supplementary bill rested on the fact of the use of unauthorized power outside the approved boundary of Essar Steel India Limited, on the date of detection by DGVCL and as per the Minutes of the Meeting dated 01.02.2010.
60. On 05.01.2012, the State Government wrote a letter to DGVCL, concluding that upon careful examination of the findings and conclusions of the Committee, it was found that there was no theft of electricity and full energy was accounted and paid for. It was further stated that the provisions of Section126(6) of the Electricity Act, 2003, would have to be examined. DGVCL was directed to apply the said provisions and charge penalty at a rate equal to twice the tariff for the electricity consumed, for the time being, till the case of the total claim was settled.
Page 66 of 112 C/SCA/5621/2014 CAV JUDGMENT
61. Accordingly, on 25.01.2012, pursuant to the aforesaid letter, DGVCL issued two revised supplementary bills for a total amount of Rs.192,58, 53,664/, worked out as per the formula contained in subsection (6) of Section126 of the Act, till the total claim was finally satisfied.
62. From the above action of DGVCL, it is amply clear that the action of the issuance of the revised supplementary bills has been consciously taken under the provisions of Section126 of the Act, for the unauthorized use of electricity by Essar, outside the power boundary. Before, or while, issuing the revised supplementary bills, DGVCL did not raise any objections or register any protest. Having issued the revised supplementary bills under the provisions of Section126 of the Act, for an admitted, unauthorized use of electricity outside the power boundary, and having made the assessment at a rate equal to twice the tariff applicable as per the provisions of sub section (6) of Section126 of the Act, in the considered view of this Court, it does not now lie in Page 67 of 112 C/SCA/5621/2014 CAV JUDGMENT the mouth of DGVCL to state that the provisions of Section126 are not applicable and the assessment as per Subsection (6) of Section126 is not correct or final.
63. It may be noted that the provisions of Section 145 of the Act, bar the jurisdiction of the Civil Court. The said section is reproduced hereinbelow :
"145.Civil Court not to have jurisdiction - No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an assessing officer referred to in section 126 or an appellate authority referred to in section 127 or the adjudicating officer appointed under this Act is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act."
There is no remedy available to the consumer against any action for the unauthorized use of electricity under Section126, except to prefer an appeal under Section127 of the Act.
64. DGVCL cannot be permitted to blow hot and cold at Page 68 of 112 C/SCA/5621/2014 CAV JUDGMENT the same time. On one hand, it claims that the dispute between it and Essar pertains to a breach of the agreement arrived at in the Minutes of Meeting and on the other hand it has itself issued the revised supplementary bills on the basis of Section126 of the Act. If, as submitted on behalf of DGVCL, the default of Essar lies in a breach of contract, then the remedy would be to file a Civil suit, which is not permissible under the Act. DGVCL is a Distribution Licencee, governed in all respects, by the provisions of the statute. It cannot seek to enforce a remedy which is dehors the statute when it is found suitable for it, while taking action under the Act, at the same time. This amounts to approbation and reprobation in one breath and such double standards are not permissible in law.
65. There is no ambiguity regarding the fact that the substance of the dispute pertains to the unauthorized use of electricity. A dispute of this nature can only be adjudicated under the Act. At the best, the case of DGVCL can only be that such authorized use is contemplated under the Minutes of Meeting and in the Page 69 of 112 C/SCA/5621/2014 CAV JUDGMENT event of default, it is entitled to levy penalty as decided in the Minutes. Even if it is taken that DGVCL is entitled to claim any amount, the manner in which such amount is to be worked out would depend upon a finding rendered by the Competent Authority, after considering the nature of the unauthorized use of electricity. If a finding is rendered to the effect that there was an unauthorized use of electricity, the assessment can only be made under Section126 of the Act, which is the relevant (and only) provision of law in this regard. By submitting that no appeal under the provisions of Sections126 and 127 of the Act is competent, after issuing revised supplementary bills under Section126, itself, DGVCL is, in effect, attempting to obliterate the right of the consumer in taking recourse to a statutory legal remedy which, incidentally, is the only remedy available to it. DGVCL has not enlightened this Court as to what other remedy the consumer could have availed of, in the above circumstances. It cannot be expected that the Distribution Licencee will take a stand that the consumer has to submit to its dictates and not avail of a remedy in accordance with law. In the view of Page 70 of 112 C/SCA/5621/2014 CAV JUDGMENT this Court, such a stand on the part of DGVCL is impermissible.
66. The fact remains that DGVCL has acquiesced to the directives of the State Government to treat the dispute as one under Section126 of the Act, without a whisper of protest. Not only that, it has issued the revised supplementary bills as per the formula of assessment contained in subsection (6) of Section126 of the Act. Having acquiesced in this manner, it cannot now be permitted to take a stand that the provisions of Section126 are not applicable, especially as DGVCL has failed to satisfy this Court to the contrary.
67. In this context, reference may be made to a judgment of the Supreme Court in (M/s.) Power Control Appliances and others Vs. (M/s.) Sumeet Machines Private Limited, reported in 1994 (2) GLH 557, relevant extract whereof is reproduced as under:
"29. Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of conduct inconsistent with the claim for exclusive rights in a trade mark, trade name, etc. It implies positive acts; not merely Page 71 of 112 C/SCA/5621/2014 CAV JUDGMENT silence or inaction such as is involved in laches. In Harcourt v. White (28 Beav 303) Sr. John Romily said: "It is important to distinguish more negligence and acquiescence." Therefore, acquiescence is one facet of delay. If the plaintiff stood by knowingly and let the defendants build up an important trade until it had become necessary to crush it, then the plaintiffs would be stopped by their acquiescence". If the acquiescence in the infringement amounts to consent, it will be a complete defence as was laid down in Mouson & Co. v. Boehm (1884) 26 Ch D 406. The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant as was laid down in Rodgers v. Nowill (1847) 2 De GM & G 614: 22 LJ K Ch 404."
(emphasis supplied)
68. The principles of law enunciated in the above judgment squarely apply to the present case, as DGVCL has knowingly issued the revised supplementary bills under the provisions of Section126 of the Act with full consent. This amounts to a positive act by it which cannot be repudiated later.
69. It has been submitted on behalf of DGVCL that the provisions of Section126 of the Act have not been Page 72 of 112 C/SCA/5621/2014 CAV JUDGMENT followed while issuing the revised supplementary bills, inasmuch as there was no provisional assessment and no final order has been passed. This submission is not found to be particularly convincing. It is the spirit of the provisions of law that has to be followed and not only the letter. Here, there is a substantial compliance with both the letter and spirit of Section126 of the Act. The premises of ESIL were inspected on 21.07.2011 and a Show Cause Notice was issued on 26.07.2011 by DGVCL, to which objections were filed by ESIL, vide letters dated 29.07.2011 and 08.09.2011. A final decision was taken on the objections vide order dated 22.09.2011, which was for the issuance of the two revised supplementary bills. The said bills are in respect of the entire quantity of energy recorded in the meters on the second Tie LIne for 168.42 MV. Moreover, the revised supplementary bills have been issued on the ground of unauthorized use of electricity, as contemplated in the Minutes of Meeting. This order can be considered to be a final order as contemplated under Section 126(3) of the Act. An appeal is provided to the Appellate Authority under such a final order. ESIL has Page 73 of 112 C/SCA/5621/2014 CAV JUDGMENT deposited the amount of the revised supplementary bills, therefore, the condition of predeposit under Section127(2) of the Act has also been complied with. The claim of DGVCL for Rs.2311 Crores approximately, stood revised to Rs.192.58 Crores, by the revised supplementary bills, which is a final claim under the Act for all intents and purposes. Taking into consideration all the above aspects, the findings of the Appellate Authority in the impugned order, that the appeal is competent, cannot be faulted by this Court.
70. Coming to the issue of limitation, it may be noted that this issue was not at all raised by DGVCL before the Appellate Authority. Before this Court, it has been argued that the issue of limitation, being a legal issue, can be raised at any stage. Learned Senior Advocate for DGVCL has relied upon Draupadi Devi and others Vs. Union of India and others (Supra.) and Kamlesh Babu and others Vs. Lajpat Rai Sharma and others (Supra.), in support of this contention. However, these two judgments do not appear to be relevant in the facts and circumstances of the present case, especially taking into consideration the Page 74 of 112 C/SCA/5621/2014 CAV JUDGMENT language of Section127(1) of the Act.
71. The specific contention of the learned Senior Advocate for DGVCL is that even assuming that the appeal is maintainable, it was filed much beyond the prescribed period of limitation. Reliance is placed on a judgment in Chhattisgarh State Electricity Board Vs. Central Electricity Regulatory Commission and others (Supra.). This judgment pertains to Section 125 of the Electricity Act, 2003, particularly the proviso thereto. The language of Section125 (proviso) is totally different from the language of Section 127(1). The proviso to Section125 makes it clear that in no event can the period of limitation be extended beyond sixty days. This is not so, insofar as Section 127(1) is concerned. In Section125, by necessary implication, the provisions of the Limitation Act have been excluded but the same does not appear to be the position under Section127(1) of the Act. The judgment in Chhattisgarh State Electricity Board Vs. Central Electricity Regulatory Commission and others (Supra.), would, therefore, not be applicable to the facts of the present case.
72. On the other hand, Mr.Mihir H. Joshi, learned Page 75 of 112 C/SCA/5621/2014 CAV JUDGMENT Senior Advocate for Essar has relied upon the judgment of the Supreme Court in Mukri Gopalan Vs. Cheppilat Puthanpurayil Aboobacker (Supra.), wherein it is held as below :
"8. ***** When the aforesaid well settled tests for deciding whether an authority is a court or not are applied to the powers and functions of the appellate authority constituted under Section 18 of the Rent Act, it becomes obvious that all the aforesaid essential trappings to constitute such an authority as a court are found to be present. In fact, Mr.Nariman, learned counsel for respondent also fairly stated that these appellate authorities would be courts and would not be persona designata. But in his submission as they are not civil courts constituted and functioning under the Civil Procedure Code as such, they are outside the sweep of Section 29(2) of the Limitation Act. It is, therefore, necessary for us to turn to the aforesaid provision of the Limitation Act. It reads as under :
"S.29(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of Page 76 of 112 C/SCA/5621/2014 CAV JUDGMENT determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law."
A mere look at the aforesaid provision shows for its applicability to the facts of a given case and for importing the machinery of the provisions containing Sections 4 to 24 of the Limitation Act the following two requirements have to be satisfied by the authority invoking the said provision.
(i) There must be a provision for period of limitation under any special or local law in connection with any suit, appeal or application.
(ii) The said prescription of period of limitation under such special or local law should be different from the period prescribed by the schedule to the Limitation Act.
9. If the aforesaid two requirements are satisfied the consequences contemplated by Section 29(2) would automatically follow. These consequences are as under :
(i) In such a case Section 3 of the Limitation Act would apply as if t6he period Page 77 of 112 C/SCA/5621/2014 CAV JUDGMENT prescribed by the special or local law was the period prescribed by the schedule.
(ii) For determining any period of limitation prescribed by such special or local law for a suit, appeal or application all the provisions containing Sections 4 to 24 (inclusive) would apply insofar as and to the extent to which they are not expressly excluded by such special or local law."
73. By entertaining the appeal preferred by Essar and deciding it, the Appellate Authority has, in effect, condoned the delay, which aspect was never objected to by DGVCL at any point of time during the hearing of the appeal. The objection regarding limitation was available to DGVCL, but was abandoned before the Appellate Authority. Hence, this objection at this stage, does not merit acceptance. This is especially so, as no convincing legal arguments have been advanced on behalf of DGVCL to persuade this Court to conclude that the provisions of the Limitation Act would not apply to Section127(1) of the Act.
Chief Electrical Inspector as Appellate Authority :
74. It has been argued on behalf of the petitioner DGVCL that the Chief Electrical Inspector who was Page 78 of 112 C/SCA/5621/2014 CAV JUDGMENT appointed by the State Government on the Committees as a member, has passed the impugned order. The submission is that having been a member of the Committees, he could not have acted as the Appellate Authority, therefore, a Writ of Certiorari would lie to quash and set aside the impugned order, on this ground.
75. It may be noted that DGVCL was very much aware of this aspect of the matter when the Appellate Authority was hearing the appeal preferred by Essar. However, DGVCL did not consider it appropriate or necessary to raise this objection before the Appellate Authority but actively participated in the proceedings. The issue involved in the appeal preferred by Essar before the Appellate Authority was the revised supplementary bills issued by DGVCL under Section12(6) of the Act. None of the committees formed by the State Government, at any point of time, has adjudicated upon this aspect; obviously, because the issue had not arisen at the relevant point of time when the Committees made their reports. Though the Committee, vide its Report dated 13.12.2011, did take the view that the matter of Page 79 of 112 C/SCA/5621/2014 CAV JUDGMENT supplementary bills rested on the fact of the unauthorized use of power outside the approved boundary, it did not enter into any adjudication of the matter, as that was beyond its scope and functioning. It is only the Appellate Authority appointed by the State Government under Section127(1) of the Act, read with the Appeal to the Appellate Authority Rules, 2004, framed under Section176(2)(u) of the Act, that has jurisdiction to hear appeals preferred against a final order passed under Section 126 of the Act. It is relevant to note that though an objection regarding the Appellate Authority has been taken by DGVCL at this stage, no allegations of bias or malafides have been levelled against the said Authority. Further, it has not been submitted that DGVCL has been prejudiced in any manner by the hearing of the appeal by the Appellate Authority. When there are no allegations of bias or malafides and no averments as to prejudice, the objection is only an empty one and deserves to be discarded.
76. In State Bank of India Vs. Ram Das and another (Supra.), relied upon by Mr.Mihir H. Joshi, learned Senior Advocate for Essar, the Supreme Court has held Page 80 of 112 C/SCA/5621/2014 CAV JUDGMENT as below :
"24. We, in this case, are not concerned with any act of malice on the part of the umpire. Malice has to be specifically pleaded and proved. Neither there exists any pleading in that behalf nor would it appear from the discussions made hereinafter that at any stage such a contention has been raised.
25. The appellant had four opportunities to raise the question of bias. The first opportunity was when the umpire filed the award in the court for being made rule of the court and appointed a lawyer to prosecute the matter. It is not disputed, the appellant was aware of the fact that the umpire did file the appeal himself in the City Civil Court and appointed a lawyer to prosecute the proceedings. Despite knowledge of the fact of filing objections under Sections 30 and 33 of the Act it did not raise the question of bias against the umpire. The second stage made available to the appellant when it filed an IA for setting aside the award on the ground that it did not contain reasons in view of the said amendment in the Act in Section 17 of the Act. Not only this, the appellant had third opportunity when the matter was remitted back to the umpire. It is relevant to mention here that the appellant was crossexamined before the Additional Judge, City Civil Court but no question as regard bias was put to him. The Page 81 of 112 C/SCA/5621/2014 CAV JUDGMENT fourth opportunity arose when the proceedings were remitted back to the umpire and thereto also the appellant did not raise any question as regards bias.
26. Again, when the aforesaid award was given by the umpire and same was filed in City Civil Court, again the appellant did not raise any objection as regards bias and the appellant happily participated in the proceedings. Yet again when the award was made rule of the court, the appellant filed an appeal before the High Court of Judicature at Hyderabad but no ground of bias was taken in the memo of appeal or in the civil revision petition.
27. It was only after the High Court adversely commented upon the conduct of the arbitrator in the manner as noticed hereinbefore, that the appellant became wiser and for the first time this objection has been taken before us. It is an established view of law that where a party despite knowledge of the defect in the jurisdiction or bias or malice of an arbitrator participated in the proceedings without any kind of objection, by his conduct it disentitles itself from raising such a question in the subsequent proceedings. What we find is that the appellant despite numerous opportunities made available to it, although it was aware of the defect in the award of the umpire, at no stage Page 82 of 112 C/SCA/5621/2014 CAV JUDGMENT made out any case of bias against the umpire. We, therefore, find that the appellant cannot be permitted to raise the question of bias for the first time before this Court."
(emphasis supplied)
77. The above observations of the Supreme Court fortify the view taken by this Court. DGVCL has participated in the proceedings before the Appellate Authority without raising any objections and only after the conclusion of the proceedings, which were not in its favour, has it taken this objection for the first time. Such conduct of DGVCL, therefore, disentitles it from raising such an objection at this stage.
Contention regarding breach of agreement :
78. It has been vehemently submitted by Mr.Mihir J. Thakore, learned Senior Advocate on behalf of DGVCL, that the dispute arises solely because Essar committed a breach of the agreement recorded in the Minutes of Meeting dated 01.02.2010. It has further been submitted that there is nothing in the Electricity Act, 2003, that prohibits a contract of this nature; therefore, an appeal would not lie under the statute. Page 83 of 112 C/SCA/5621/2014 CAV JUDGMENT In support of this submission, reliance is placed on a judgment in Oil and Natural Gas Corporation Limited Vs. Saw Pipes Limited (Supra.).
79. In this judgment, the Supreme Court was dealing with a challenge to the arbitral award and the grounds of such challenge. The Supreme Court held that an award contrary to the substantive provisions of law or the provisions of the Arbitration and Conciliation Act, 1996, would be patently illegal. Learned Senior Advocate for DGVCL laid stress on the observations of the Supreme Court that for the construction of the contract, the intention of the parties is to be gathered from the words used in the agreement and submitted that the penal Clause No.2.2 in the Minutes of Meeting dated 01.02.2010, expressed the intention of the parties and was agreed by Essar, therefore, they are bound by it.
80. The above judgment does not come to the aid of DGVCL in any manner, as the intention of the parties is to be seen in the context of the agreement being arrived at, the situation prevailing at that point of time and the issues in dispute regarding which the Page 84 of 112 C/SCA/5621/2014 CAV JUDGMENT agreement was made. The issues in dispute before the Committee when the Minutes of Meeting dated 01.02.2010, were (i) shifting of the lines and (ii) supply of power to nonconsumer Group companies.
81. There is considerable force in the submissions advanced by Mr.S.N.Shelat, learned Senior Advocate for Essar, that the penal Clause No.2.2 in the Minutes of Meeting dated 01.02.2010 is in terrorem as, by its oppressive and burdensome nature, it would ensure compliance of the agreement.
82. The intention of the parties can only be seen in the context of the controversy in dispute for which the agreement was made. The scenario has substantially changed subsequently, after the drawing up of the Minutes of Meeting dated 01.02.2010. The background in which the impugned order has been passed pertains to the revised supplementary bills for unauthorized use of power beyond the power boundary after merger of the member units with ESIL. This situation was not contemplated in the Minutes of Meeting dated 01.02.2010. At that point of time the order of merger Page 85 of 112 C/SCA/5621/2014 CAV JUDGMENT of the group companies with ESIL had not been passed. Therefore, it cannot be said that the intention of the parties in drawing up the penal clause can be stretched much beyond the factual scenario which has subsequently changed, to cover a different situation envisaged after the issuance of the revised supplementary bills by DGVCL under Section126(6) of the Act.
83. As already discussed hereinabove, the Act debars the jurisdiction of the Civil Court, as per the provisions of Section145 thereof. Being a Distribution Licencee, DGVCL is bound to function under the provisions of the Act and Rules and Regulations framed thereunder. Had it been the intention of the legislature to permit adjudication by Civil Courts in matters under the Act, Section145 would not have been enacted. The submission on behalf of DGVCL that nothing in the Act debars a contract/agreement of the nature contained in the Minutes of Meeting carries no weight. Had it been the intention of the legislature to permit such a contract or agreement it would have expressly stated so and also provided the remedy. The submissions on behalf of Page 86 of 112 C/SCA/5621/2014 CAV JUDGMENT DGVCL fly in the face of Section145 of the Act.
84. A penalty for unauthorized use of electricity cannot be worked out dehors the permissible boundaries of the Act. The factual situation pursuant to the Minutes of Meeting dated 01.02.2010, underwent a substantive change. When DGVCL has itself, without prejudice or objection, treated the matter as one under Section126(6) of the Act and issued revised supplementary bills as per the formula contained in subsection (6) of Section126, it cannot now claim that the dispute falls within the realm of contract and not under the statute. The submissions of the learned Senior Advocate for DGVCL, in this regard are, therefore, not convincing.
85. DGVCL is "State" within the meaning of Article12 of the Constitution of India. All its actions and functions as a Distribution Licencee have to be carried out within the four corners of the Act, Rules and Regulations. It cannot devise a procedure dehors the Act, of its own accord, to suit its own fancies. Being "State", the actions of DGVCL have to be tested on the touchstone of reasonableness. Its actions are Page 87 of 112 C/SCA/5621/2014 CAV JUDGMENT expected to be free from the taint of arbitrariness. DGVCL cannot be permitted to approbate and reprobate, at the same time. After having accepted the decision of the State Government to treat the dispute as one under Section126(6) of the Act, and having actually issued the revised supplementary bills as per the said provisions of law, it cannot now take a stand that the statute would not govern the matter which, according to it, is contractual in nature. This Court is unable to agree with the submissions advanced on behalf of DGVCL in this regard. On the other hand, there is a considerable weight and force in the submissions advanced by Mr.Mihir H. Joshi, learned Senior Advocate for Essar, to the contrary.
Effect of amalgamation :
86. At the relevant point of time when the Minutes of Meeting dated 01.02.2010 were drawn up and an agreement reached between the parties, only ESIL was a consumer of DGVCL. The other units of the Essar Group were not consumers, even though most of them were located in the same complex. It was precisely to prevent the flow of power to the nonconsumer units that the mechanism of reverse power relay was agreed Page 88 of 112 C/SCA/5621/2014 CAV JUDGMENT upon in the Minutes of Meeting. Subsequently, a Scheme of Amalgamation was sanctioned by the High Court vide order dated 30.06.2010, which became effective from 05.08.2010. The consequential legal effect thereof, interalia, was that Essar Steel (Hazira) Limited, the Transferor Company, stood merged with ESIL, the Transferee Company, and ceased to have been any independent legal existence thereafter. According to Essar, on the date of the purported default on 15.06.2011, there was no supply of DGVCL power to a member unit, since it had ceased to exist and stood merged with the consumer. Therefore, the default clause in the Minutes of Meeting dated 01.02.2010, was not triggered.
87. The stand of DGVCL is that the amalgamation of other units of Essar Group which were not the consumers with ESIL (the consumer), does not mean that the merged units would automatically become consumers of DGVCL. According to DGVCL, the legal entity, even after becoming a single one after merger, does not mean that the merged units becomes a single consumer as a consumer is to be seen in relation to the Page 89 of 112 C/SCA/5621/2014 CAV JUDGMENT premises and not to the legal entity.
88. On behalf of DGVCL, reliance has been placed upon the judgment of Singer India Ltd. Vs. Chander Mohan Chadha (Supra.), in support of the above submission.
89. The facts of that case were on a somewhat different footing, which have no relevance to the dispute in the present case. The Supreme Court held, on the facts of that case, that the provisions under Section14(1) proviso (b) of Delhi Rent Control Act, 1958, for recovery of possession, would be applicable upon the occurrence of the factual situation of sub letting, assignment or otherwise parting with possession, whether by a voluntary act or otherwise and irrespective of the reasons therefor. In that case, on amalgamation of the tenant company with another company, it was held that the former ceased to exist and in terms of the Amalgamation Scheme, the latter company came in possession and occupation of the demised premises. Therefore, the amalgamation, although effected for complying with RBI's direction issued under Section29, FERA, 1973, to the tenant foreign company to reduce its share capital to the Page 90 of 112 C/SCA/5621/2014 CAV JUDGMENT specified limit in order to carry on business in India, attracted the provisions of Section14(1) proviso (b) of the Delhi Rent Control Act, 1958. The ratio of this judgment rests upon its own peculiar facts and would not help the petitionerDGVCL in the present case.
90. On the other hand, Mr.Mihir H. Joshi, learned Senior Advocate for Essar has placed reliance upon the judgment of the Supreme Court in Singer India Ltd. Vs. Chander Mohan Chadha (Supra.), wherein the Supreme Court has held as below :
"7. The provision for facilitating reconstruction and amalgamation of companies is made under Section 394 of the Companies Act. In an amalgamation, two or more companies are fused into one by merger or by one taking over the other. Reconstruction or amalgamation has no precise legal meaning. In Halsbury's Laws of England (4th Edn., Vol.7), para 1539, the attributes of amalgamation of companies have been stated as under :
"Amalgamation is a blending of two or more existing undertakings into one undertaking, the shareholders of each blending company becoming substantially the shareholders in the company which is to carry on the blended Page 91 of 112 C/SCA/5621/2014 CAV JUDGMENT undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new company, or by the transfer of one or more undertakings to an existing company. Strictly "amalgamation"
does not, it seems, cover the mere acquisition by a company of the share capital of other companies which remain in existence and continue their undertakings, but the context to which the term is used may show that it is intended to include such an acquisition.
The question whether a winding up is for the purposes of reconstruction or amalgamation depends upon the whole of the circumstances of the winding up."
8. In Saraswati Industrial Undertaking v. CIT, (para 6), it has been held that there can be no doubt that when two companies amalgamate and merge into one, the transferor company loses its identity as it ceases to have its business. However, their respective rights or liabilities are determined under the Scheme of Amalgamation, but the corporate identity of the transferor company ceases to exist with effect from the date of amalgamation is made effective. Therefore, in view of the settled legal position, the original lessee, namely, the American Company ceased to exist with effect from the appointed day i.e. 1 Page 92 of 112 C/SCA/5621/2014 CAV JUDGMENT 11982 and thereafter the Indian Company came in possession and is in occupation of the premises in dispute." (emphasis supplied)
91. This judgment is more to the point in the context of the present dispute. In light of the principles of law enunciated in the abovequoted judgment, there cannot be any doubt that, when companies amalgamate and merge into one, the Transferor Company loses its identity as it ceases to have its business when the amalgamation is made effective.
92. The record reveals that Essar addressed a letter to GETCO on 21.05.2011, stating that the Scheme of Amalgamation has been sanctioned and had become effective from 05.08.2010, therefore, the units/companies covered under the said Scheme, inter alia, being Essar Steel (Hazira) Limited had merged into ESIL, which was an existing consumer of DGVCL. Consequently, the contract demand of ESIL would automatically cover the supply to the units of the merged entities and the reverse power flow relay should be removed. It was stated that there is no Page 93 of 112 C/SCA/5621/2014 CAV JUDGMENT company having its units within the complex which is not covered under the Scheme of Amalgamation. By reason of the merger, Essar applied to DGVCL for an increase in the contract demand from 44.5 MVA to 60 MVA by a letter dated 01.06.2011.
93. By a letter dated 04.06.2011, GETCO informed ESIL that it should submit the details of the amalgamation to DGVCL for confirmation; after which a verification and personal inspection at the site would take place before the reverse power flow relay could be removed by GETCO. On 04.06.2011 itself, GETCO directed DGVCL to take steps for the removal of the reverse power flow relay. Again, on 08.06.2011, Essar addressed a letter to DGVCL for the removal of the reverse power flow relay and requested that urgent action be taken in view of the problems faced by it, regarding frequent line tripping and low utilization of the additional power of 200 MW purchased from GUVNL, vide agreement dated 13.05.2011, under open access.
94. It is significant to note that in response to the application of Essar for increasing the contract demand, DGVCL, by its letter dated 15.06.2011, itself Page 94 of 112 C/SCA/5621/2014 CAV JUDGMENT directed ESIL to get the power boundary approved. ESIL, therefore, made an application dated 15.06.2011 for extension of the power boundary, to DGVCL.
95. According to Essar, since no action was taken by DGVCL in spite of the directions of GETCO and as there was frequent tripping and under utilization of the open access power resulting in damage to equipments and as an emergency, interim measure, the line isolator between the connection point of the underpass on the second electrical line and BusBar was closed by it. The reverse power relay on the first electrical line between Bhander Power Limited and the BusBar remained as it is, but power could flow from the Bus Bar to the segment of the second electrical line and through the underpass to Essar Steel (Hazira) Limited. According to Essar, since a meter had been installed on the second electrical line at its connection point to the BusBar, such electrical energy would be duly recorded in the meter.
96. Again, on 01.07.2011, Essar addressed a letter to DGVCL, seeking sanction/approval for the removal of the underpass arrangement and the final proposed Page 95 of 112 C/SCA/5621/2014 CAV JUDGMENT arrangement for restoration of the earlier position and connections regarding the main receiving Sub Stations. Accordingly, on 21.07.2011, DGVCL carried out an inspection of the premises and found that :
"Observations at BPOL :
1. BPOL MRSS line 1 is in ON condition and supplying power to MRSS (Old) with reverse power relay in circuit.
2. BPOL MRSS line 2 is in isolated condition with 220 KV breaker OFF and all isolators are opened."
97. There is no doubt regarding the fact that the action taken by ESIL in unilaterally removing the reverse power relay system resulted in power flowing to the units which were not consumers of DGVCL at the time when the Minutes of the Meeting were recorded. They stood merged with ESIL only later, after the sanctioning of the Scheme of Amalgamation. After amalgamation, as per the judgment of the Supreme Court in Singer India Ltd. Vs. Chander Mohan Chadha (Supra.), nonmember units merged with ESIL and become fused into one, and the Transferor Companies lost their separate identities. However, for the utilization of power by the erstwhile nonconsumer Page 96 of 112 C/SCA/5621/2014 CAV JUDGMENT units, it was incumbent that the power boundary should be extended to cover the areas of those erstwhile non member units which had now fused with the original consumer. The power boundary was required to be extended.
98. DGVCL has itself treated the extension of the power boundary as a remedial measure, as is clear from its letter dated 17.04.2012, addressed to Essar, directing the extension of the power boundary of ESIL. It has, in fact, approved the very action undertaken by Essar on 15.06.2011, vide its letter dated 14.05.2012.
99. Moreover, the State Government has itself concluded (and this conclusion has not been denied by DGVCL) that the issue in dispute refers to the breach of the power boundary. This is clearly recorded in the Report of the Committee dated 13.12.2011. It is stated therein that "the whole matter of the supplementary bill rested on the fact of the use of unauthorized power outside the approved boundary of Essar Steel India Limited on the date of detection by DGVCL and as per the Minutes of the Meeting dated 01.02.2010". Page 97 of 112 C/SCA/5621/2014 CAV JUDGMENT (emphasis supplied)
100. A document that is highly relevant in this context is the letter dated 05.01.2012 of the State Government to DGVCL, wherein it is clearly stated that the fact remains that there is no theft of electricity as fully energy is accounted and paid for, therefore, the matter is required to be considered under the provisions of subsection (6) of Section126 of the Act, till the case of total claim is settled.
101. It is crystal clear that the unauthorized use of electricity by ESIL, as contemplated under Section 126(6) of the Act, was regarding the utilization of power outside the approved power boundary and, in terms of Explanation(b)(v) to the said section, for premises or an area other than that for which the supply of electricity was authorized. Despite the amalgamation, Essar could not have utilized power without the extension of the power boundary. This, precisely, is the unauthorized use of electricity committed by it, inviting consequences under sub section (6) of Section126, as per which the revised Page 98 of 112 C/SCA/5621/2014 CAV JUDGMENT supplementary bills have been issued.
102. The submission of Mr.Mihir J. Thakore, learned Senior Advocate for DGVCL, to the effect that it is not a mere case of extension of the power boundary, as other units were not consumers of DGVCL, is unconvincing, considering the factual and legal position as discussed hereinabove and as highlighted by the record.
Whether the revised supplementary bills are final :
103. It has been forcefully argued on behalf of DGVCL that the revised supplementary bills, though issued under Section126 of the Act, are not final in nature, as the procedure under the said provision of law has not been followed by DGVCL. It has been contended that there was no provisional assessment, no opportunity of hearing was granted and no final decision of the Assessing Authority took place. It has also been pointed out that the State Government, in its letter dated 05.01.2012, has stated that the issuance of the supplementary bills is a stopgap arrangement till the total claim is settled. It is submitted that DGVCL has Page 99 of 112 C/SCA/5621/2014 CAV JUDGMENT issued the said bills till the total claim of Rs.2311,02,43,968/ is finally settled.
104. There is no doubt regarding the fact that the original claim of DGVCL for Rs.2311,02,43,968/ for 202,09,92,000 units, worked out as per the formula contained in the Minutes of the Meeting dated 01.02.2010, has been revised by DGVCL by issuing the revised supplementary bills for an amount of Rs.192,58,53,664/ on 25.01.2012. At the cost of repetition, it bears mention that DGVCL has not, at any point of time, raised any objection regarding the issuance of the supplementary bills as per Section126 of the Act, to the State Government. Neither has it refused to act in accordance with the provisions of Section126 of the Act in this regard. It is not the case of DGVCL that the said provision of law is inapplicable in cases of unauthorized use of electricity. Merely by harping upon the words "till the case of total claim is settled", in the letter dated 05.01.2012 of the State Government and its own forwarding letter dated 25.01.2012, vide which the revised supplementary bills have been issued, it does not mean that the consumer is estopped from taking Page 100 of 112 C/SCA/5621/2014 CAV JUDGMENT legal recourse against the revised supplementary bills issued under the Act, in accordance with law. As already discussed hereinabove, having once treated the revised supplementary bills as being under Section 126(6) of the Act, DGVCL cannot claim that the requirements of that section are not complied with by it and the consumer is estopped from taking legal recourse.
105. On 21.07.2011, DGVCL inspected the premises of Essar and issued a Show Cause Notice dated 26.07.2011. Objections were filed by Essar vide letter dated 29.07.2011 and 08.09.2011 and a final decision was taken on the objections vide order dated 22.09.2011, by issuing the first bill for Rs.2311,02,43,968/. The procedure under Section126 has, therefore, be substantially followed and complied with. The original amount has been revised to Rs.192,58,53,664/ after DGVCL arrived at a conclusion that there has been an unauthorized use of power. This decision is nothing but a final order in substance, under Section126 of the Act, against which an appeal is provided under Section127, to the Appellate Authority. The Page 101 of 112 C/SCA/5621/2014 CAV JUDGMENT submissions advanced by the learned Senior Advocate for DGVCL to the contrary do not merit acceptance.
Findings of the Appellate Authority on merits :
106. After holding that the appeal under Section126 of the Act is maintainable, which finding is supported by ample reasoning and does not require the interference of this Court for reasons stated hereinabove, the Appellate Authority has rendered a finding on the basis of the Report of the Committee constituted by the Government of Gujarat to the effect that "there is no theft as full energy is accounted and paid for but a unilateral decision has been taken by Essar to overrule the reverse power relay restriction and avail power from their CPP, DGVCL and Open Access power from GUVNL. So the whole matter of supplementary bill rests on the fact of use of unauthorized power outside approved boundary of Essar Steel on date of detection by DGVCL and as per Minutes of Meeting 01.02.2010."
107. The findings of the Appellate Authority are that the above Committee was of the view that although the Page 102 of 112 C/SCA/5621/2014 CAV JUDGMENT method of calculation was stipulated in the Minutes of Meeting, the situation created by Essar resulted in unauthorized use of electricity as explained under Section126, therefore, the assessment should be made according to the provisions of that section as directed by the State Government, instead of using the formula of twelve times of consumption at twice the tariff, as per the Minutes of Meeting. According to the Appellate Authority, the Minutes of Meeting dated 01.02.2010 would not have an overriding effect upon the provisions of the Electricity Act, 2003, and the Regulations. Before this Court as well, DGVCL could not satisfactorily point out that the Minutes of Meeting and the penal clause contained in it would override the provisions of the statute. This finding of the Appellate Authority, therefore, cannot be faulted.
108. The Appellate Authority has further held that though this Court has approved the merger of the group companies with ESIL, however, the extension of the power boundary was not accorded by DGVCL at the relevant point of time. Hence, it was a matter of unauthorized use of electricity under Section126 of Page 103 of 112 C/SCA/5621/2014 CAV JUDGMENT the Act and was appealable under Section127. There is no doubt regarding the fact that during the relevant period of time for which the revised supplementary bills have been issued, there was no extension of the power boundary to cover the merged units. Thus, it cannot be disputed that there was an unauthorized use of electricity by Essar, to that extent. This has also been held by the Committee formed by the State Government and has not denied by DGVCL. In fact, DGVCL has issued the revised supplementary bills on the basis of such unauthorized use of electricity, under Section126 of the Act, without any protest or objection. The Appellate Authority did not agree with the submission of Essar that after the merger, the group companies also became consumers and were eligible for consumption of electricity from the existing connection, holding that corporate merger may not necessarily result into automatic physical merger of various undertakings of the merged entities. The premises of the undertakings of the merged entities would not become eligible for usage of electricity from the existing power connection for the premises of the parent entity unless the power boundary is Page 104 of 112 C/SCA/5621/2014 CAV JUDGMENT extended suitably by the supplier thereby authorizing usage of power in the extended premises as well. The Appellate Authority further found that all such units which were not entitled to draw power under the supply contract of ESIL would not automatically be entitled to do so by virtue of the order of amalgamation, unless authorized by the Distribution Licencee.
Therefore, the consumption of electricity recorded in the meter of Tie Line2 in this case, has to be construed as an unauthorized use of electricity, not only as per the conditions contained in the Minutes of Meeting, but also as per the provisions of Section 126 of the Electricity Act, 2003. Having held so, the Appellate Authority further goes on to state that the assessment of the unauthorized use of electricity is required to be made in a way which is just, lawful and consistent with the Act. The same view has also been taken by the Committee of the State Government in this matter. The Appellate Authority has conclusively held that the Minutes of the Meeting, cannot have an overriding effect on the parent statute and the subordinate legislature made thereunder.
109. The above findings of the Appellate Authority Page 105 of 112 C/SCA/5621/2014 CAV JUDGMENT cannot be considered to be illegal, beyond its jurisdiction, perverse or unreasonable, in any manner, as the Act would govern the actions, duties and functions of the Distribution Licencee, in all respects.
110. The finding that the revised supplementary bills issued to Essar for the unauthorized use of electricity are virtually under Section126 of the Act cannot be said to be baseless. The Appellate Authority has considered the actual supply of electricity by DGVCL to Essar and has held that as DGVCL has supplied only 25.23 MU of power to Essar during the period from 15.06.2011 to 30.07.2011, only this quantity of power should, at the most, be considered as unauthorizedly used. It has been held on the basis of the record, and not denied by DGVCL, that Essar has consumed total power of 637.26 MU (KWH) (within authorized and unauthorized premises), out of which its own generation was 470.52 MU, 141.51 MU were purchased from GUVNL under the Open Access and only 25.23 MU was supplied by DGVCL (based on SLDC data). The Appellate Authority accepted the contention of Essar that out of Page 106 of 112 C/SCA/5621/2014 CAV JUDGMENT 637.26 MU of power consumed, it had drawn 470.52 from its own generation and 141.51 MU though Open Access facility and only the remaining 25.23 MU was drawn from the Grid. Thus, DGVCL has supplied only 25.23 MU to ESIL during the period from 15.06.2011 to 30.07.2011 which, at the most can be considered as unauthorized use of electricity as per Section126 of the Act. On the basis of the above, the revised supplementary bills amounting to Rs.192.58 Crores were found to be unreasonable and unjustifiable and it has been directed by the Appellate Authority that the said bills be revised for 25.23 MU of power only.
111. It has been submitted by Mr.Mihir H. Joshi, learned Senior Advocate for Essar, which is the petitioner in Special Civil Application No.5494/2014 that even assuming that there is an unauthorized use of power by Essar, it can only be to the extent of 6.63 MU on the basis of proportionate consumption of power by the merged units. It has been submitted that DGVCL had supplied 25.23 MU power during the period between 15.06.2011 and 30.07.2011 from where only 6.63 MU power has flown to the merged entities, therefore, the unauthorized use of power, if any, would only be 6.63 Page 107 of 112 C/SCA/5621/2014 CAV JUDGMENT MU and not the entire 25.23 MU of power supplied by DGVCL. On the basis of this contention, it has been submitted that the finding of the Appellate Authority that there is an unauthorized use of power to the extent of 25.23 MU is illegal and bad in law.
112. After having perused the order of the Appellate Authority minutely, it is reflected that this contention has been raised before the Appellate Authority and has been recorded in paragraph3.6 of the impugned order. However, while arriving at a conclusion that there has been an unauthorized use of power by Essar to the extent of 25.23 MU, no finding has been rendered on the specific submission of Essar that proportionately only 6.63 MU of DGVCL power has flown to the merged units.
113. The Appellate Authority has rendered a finding on the basis of specific and official data and material on record to the extent that there has been an unauthorized use of power by Essar due to nonextension of the power boundary for the relevant period of time. This Court is in agreement with the above finding. However, whether the unauthorized use is for 25.23 MU Page 108 of 112 C/SCA/5621/2014 CAV JUDGMENT of power or 6.63 MU of power on the basis of proportionate consumption of DGVCL power by the member units has not been determined by the Appellate Authority.
Conclusion in Special Civil Application No.2859/2014 :
114. The cumulative effect of the above discussion is that this Court does not find any arbitrariness, perversity or illegality in the impugned order dated 01.11.2013, passed by the Appellate Authority, directing the refund of the excess amount paid by Essar pursuant to the revised supplementary bills over and above the quantity of unauthorized power used by Essar.
115. Hence, Special Civil Application No.2859/2014 stands rejected. Rule is discharged.
Conclusion in Special Civil Application No.5494/2014 :
116. As discussed hereinabove, the Appellate Authority has failed to determine the specific contention raised by Essar to the effect that the unauthorized use of power by the merged entities from the period Page 109 of 112 C/SCA/5621/2014 CAV JUDGMENT 15.06.2011 to 30.07.2011 would only be to the extent of 6.63 MU and not the entire 25.23 MU. No findings have been rendered by the Appellate Authority on this point in the impugned order. A finding on this issue would entail going through the relevant record and data and other factual aspects and the Appellate Authority is the appropriate Forum to decide the issue at the first instance, and not this Court. As this has not been done, the petition deserves to be remanded to the Appellate Authority on this limited ground only.
117. Consequently, the finding of the Appellate Authority in the impugned order dated 01.11.2013 that unauthorized use of power by Essar is to the extent of 25.23 MU, is quashed and set aside. The matter is remanded to the Appellate Authority for fresh decision on this point, after hearing the parties on the limited issue whether the unauthorized use of power by Essar is to the extent of 25.23 MU or 6.63 MU. This be done within a period of four weeks from the date of the receipt of a copy of this judgment. Apart from the above, the rest of the order of the Appellate Authority shall remain as it is.
Page 110 of 112 C/SCA/5621/2014 CAV JUDGMENT
118. The petition is partlyallowed, to the above extent. Rule is made absolute, accordingly.
Conclusion in Special Civil Application No.5621/2014 :
119. This petition has not been seriously pressed by the learned Senior Counsel for the parties, considering the fact that this petition has nothing essentially, or directly, to do with the issue involved in the lead matter and the crosspetition. The prayers made in this petition are more or less in the nature of interim relief pending the decision of the above two petitions. It is submitted on behalf of the petitionerESIL that its fate would hang on the decision in the lead petition and crosspetition.
120. The contention raised in the petition is that an amount of Rs.192.58 Crores has been paid by the petitionerESIL, and as per the order dated 01.11.2013 passed by the Appellate Authority (impugned in lead and cross petitions), a specific amount is directed to be refunded to it, therefore, the action proposed against ESIL by way of the letters impugned in the petition, be withheld. As both the lead petition and the cross Page 111 of 112 C/SCA/5621/2014 CAV JUDGMENT petitions have been finally decided by this judgment, nothing further survives in this petition.
121. Accordingly, it stands rejected. Rule is discharged.
(SMT. ABHILASHA KUMARI, J.) Gaurav+ Page 112 of 112