Rajasthan High Court - Jodhpur
Tanot Wind Power Ventures Pvt. Ltd vs Raj. Electricity Regulatory Commi. And ... on 29 May, 2019
Bench: Sangeet Lodha, Dinesh Mehta
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
(1) D.B. Civil Writ Petition No. 18587/2018
Indian Wind Power Association (Rajasthan State Council), Having
Its Registered Office Located At Gulab Niwas, Mi Road, Jaipur,
Through Authorized Representative, Kuldeep Gupta.
----Petitioner
Versus
1. Rajasthan Electricity Regulatory Commission, Through Its
Secretary, Sahakar Marg, Jaipur.
2. State Of Rajasthan Through Its Secretary, Energy
Department, Government Of Rajasthan, Jaipur.
3. Rajasthan Rajya Vidhyut Prasaran Nigam Limited, Vidhyut
Bhawan, Jyoti Nagar, Jaipur.
4. State Load Dispatch Centre, (Through Chief Engineer
SO&Ld) Rajasthan Rajya Vidhyut Prasaran Nigam Limited,
Vidhyat Bhawan, Jyoti Nagar, Jaipur.
----Respondents
Connected With
(2) D.B. Civil Writ Petition No. 3662/2018
Tanot Wind Power Ventures Pvt. Ltd., Having Its Registered Office
At - Plot No. 1366, Road No. 45, Jubilee Hills, Hyderabad- 500
033 Telangana State, And Working Site/office At 220 Kv GSS
Habur And Chhatrail Villages, District - Jaisalmer Raj., Through
Mr. Sunil Bora S/o Late O.P. Bora, Aged About 37 Years, Working
as Sr. Manager - Corporate Relations, and for this matter as an
Authorized Signatory, in the Petitioner Company.
----Petitioner
Versus
1. Rajasthan Electricity Regulatory Commission Rerc, Vidyut
Viniyamak Bhawan, Sahakar Marg, Nr. State Moter
Garage, Jaipur Raj.- 302 001.
2. Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. Rrvpnl,
Vidhyut Bhawan, Janpath, Jyoti Nagar, Jaipur Raj.-
302005.
3. State Of Rajasthan Through The Secretary, Department Of
Energy, Secretariat, Jaipur Raj. 302 005.
----Respondents
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(3) D.B. Civil Writ Petition No. 2623/2018
M/s Ramgad Minerals And Mining Limited, A Company Registered
Under Companies Act, 1956 Having Its Registered Office At
Baldota Enclave, Abheraj Baldota Road, Hospet - 583 203,
Karnataka Through Its Authorised Singnatory, Mr. Meda
Venkataiah S/o. Obayya R/o M.j. Nagar, Hosapete - 583201
Karnataka India Aged About 72 Years
----Petitioner
Versus
1. State Of Rajasthan Through Its Principal Secretary,
Department Of Energy, Government Of Rajasthan, IT
Center, Chambal Power House Campus, Hawa Sarak,
Jaipur- 302006.
2. Rajasthan Electricity Regulatory Commission Through Its
Chairman, Vidhyut Viniyaman Bhawan, Sahkar Marg, Near
State Motor Garage, Jaipur.
3. Rajasthan Rajya Vidyut Prasaran Nigam Through Its Chief
Managing Director, Vidhyut Bhawan, Jyoti Nagar, Jaipur.
4. Jaipur Vidyut Vitran Nigam Limited Through Its Chairman,
Madhav Vilas Palace, Old Power House Premises, Near
Ram Mandir, Bani Park, Jaipur.
5. Jodhpur Vidyut Vitran Nigam Limited Through Its
Chairman, New Power House Road, Industrial Area,
Jodhpur - 342003.
6. Ajmer Vidyut Vitran Nigam Limited Through Its Chairman,
Vidhyut Bhawan, Makarwali Road, Panchsheel Nagar,
Ajmer - 305004.
----Respondents
For Petitioner(s) : Mr. Ravi Bhansali, Sr. Advocate along
with Mr. Sanjeev Johari, Mr. Shubham
Modi and Mr. Lalit Parihar
Mr. Ravi Chirania
Mr. Vikas Balia
For Respondent(s) : Mr. M.S. Singhvi, Sr. Advocate,
assisted by Mr. K.S. Lodha and
Mr. Abhishek Mehta
Ms. Susan Mathew
Mr. Kuldeep Mathur
Mr. C.P. Soni
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HON'BLE MR. JUSTICE SANGEET LODHA
HON'BLE MR. JUSTICE DINESH MEHTA Judgment (per Hon'ble Mehta,J.) 29/05/2019
1. These writ petitions have been filed by the petitioners laying challenge to the Rajasthan Electricity Regulatory Commission (Forecasting, Scheduling, Deviation Settlement and Related Matters of Solar and Wind Generation Sources), Regulations, 2017 (hereinafter referred to as 'the Forecasting & Scheduling Regulations or the Regulations of 2017').
2. The first petitioner Indian Wind Power Association, is an association of wind power generators, having 1570 members, some of whom are operating their wind farms in Rajasthan. The second petitioner, Tanot Wind Power Ventures Pvt. Ltd. (D.B. Civil Writ Petition No.3882/2018) is also a member of first petitioner, i.e. Indian Wind Power Association, whereas third petitioner though engaged in generation of power, but not a member of first petitioner.
3. As all the above writ petitions involve common facts and question of law, they are being decided conjointly, however, the facts stated by the Association are being taken into consideration.
4. The members of the first petitioner-Association, engaged in business of generation of power through wind energy, have their own separate agreements for sale of power generated by them with various electricity distribution companies, known as DISCOMs. The said agreements executed between the generators of power and various DISCOMs, such as Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. (hereinafter referred to as 'the RRVPNL') (Downloaded on 28/06/2019 at 07:15:20 AM) (4 of 41) [CW-18587/2018] known as Power Purchase Agreements contain all the terms and conditions relating to the supply of power by the members to the RRVPNL.
5. The power generated by the Members through wind energy is injected into grid developed and maintained by the respondent RRVPNL. These grids have been developed and maintained by an agency known as State Load Dispatch Committee (hereinafter referred to as 'the SLDC'). The SLDC takes care of the capacity of the grid, the load on the grid, forecasting, scheduling etc.
6. Rajasthan Electricity Regulatory Commission, in exercise of powers available to it under Section 181 of the Electricity Act, 2003, published draft regulations for forecasting and scheduling and invited objections by way of notice issued in various newspapers. After consideration of the objections submitted by various stake holders, the Regulations were finalized on 14.09.2017 and came to be published in the official gazette on 14.09.2017. The Regulations of 2017 have however, come into force w.e.f. 01.01.2018.
7. By way of the writ petitions, the petitioners have made a prayer to quash the entire Regulations of 2017 and so also the framework as approved by the Commission for forecasting and scheduling.
8. Mr. Ravi Chirania, learned counsel appearing on behalf of the Indian Wind Power Association, navigated the Court through various provisions of the Regulations of 2017 and the framework issued by the Commission. Before adverting to the contentions raised by the petitioner, it would be appropriate to reproduce (Downloaded on 28/06/2019 at 07:15:20 AM) (5 of 41) [CW-18587/2018] various important and relevant definitions provided under the Regulations, 2017, which we hereby do:
"(h) CERC means the Central Electricity Regulatory Commission referred to in sub-section (1) of Section 76 of the Act;
(i) 'Deviation' in a time-block for a seller means its total actual injection minus its total scheduled generation and for a buyer means its total actual drawal minus its total scheduled drawal;
(n) 'Pooling Station' means the sub-station where pooling of generation of individual wind generators or solar generators is done for interfacing with the grid/transmission or distribution system: Provided that where there is no separate pooling station for a wind/solar generator and the generating station is connected through common/dedicated feeder and terminated at a substation of distribution company/STU, the sub-station of distribution company/STU shall be considered as the pooling station for such wind/solar generator, as the case may be;
(o) 'Qualified Coordinating Agency or QCA' means the mutually agreed agency registered with SLDC, to act as a coordinating agency on behalf of Wind/Solar Generators connected to a pooling station and may be one of the generators;
(r) 'Scheduled Generation' at any time or for a time block or any period time block means schedule of generation in MW or MWh ex-bus;
(s) 'Scheduled drawal' at any time or for a time block or any period time block means schedule of dispatch in MW or MWh ex-bus;
(v) 'State Pool Account' means State account for receipts and payments on account of deviation by buyers or sellers including wind and solar generators and shall be maintained by SLDC;
(x) 'Time Block' means a time block of 15 minutes, for which specified electrical parameters and quantities are recorded by special energy meter, with first time block starting at 00.00 hrs;"(Downloaded on 28/06/2019 at 07:15:20 AM)
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9. By virtue of Regulation 3 of the Regulations of 2017, these Regulations are applicable to all wind power generators supplying power to the DISCOMs through open access or for captive consumption. Regulation 4 of the Regulations of 2017 defines role of Qualified Coordinating Agency (QCA) in the following terms:
"4. The Qualified Coordinating Agency (QCA) as defined at Regulation 2(1)(o) shall be nominated based on consensus and mutually agreed terms and conditions amongst the wind and solar generators. The wind and solar generators shall also inform SLDC to this effect. QCA shall be the single point of contact with SLDC on behalf of its coordinated generator(s) connected to a pooling station for the following purposes:
(1) Provide schedules with periodic revisions as per these Regulations on behalf of all the Wind/Solar Generators connected to the pooling station.
(2) Responsible for coordination with STU/SLDC and other agencies for metering, data collection and its transmission, communication.
(3) Undertake commercial settlements on behalf of the generators, of such charges pertaining to generation deviations only including payments to the State pool account through the concerned SLDC. (4) Undertake de-pooling of payments received on behalf of the generators from the State Pool account and settling them with the individual generators in accordance with these Regulations.
(5) Undertake commercial settlement of any other charges on behalf of the generators as may be mandated from time to time.
(6) All other ancillary and incidental matters."
10. Regulation 5 of the Regulations of 2017 provides that each pooling station shall have one QCA. It has however been provided that in case only one seller or wind power generator is connected to the pooling station, then such generator shall act as a QCA. (Downloaded on 28/06/2019 at 07:15:20 AM)
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11. Regulations 6 to 10 of the Regulations encompass various provisions in relation to forecasting and scheduling.
12. Part-3 of the Regulations deal with metering telemetry and data communication, whereas Part-4 encaptulates various provisions in relation to commercial and deviation settlement. The petitioners' essential concern, rather grievance, is regarding deviation charges in case of under or over injection for sale of power within the State as stipulated in Regulation 18 of the Regulations, which reads thus:
"18. In the event of actual generation of generating station or a pooling station, as the case may be, being less or more than the generation scheduled as per Regulation 16 above, the deviation charges for shortfall or excess generation shall be payable by the wind and solar generator or the QCA, as the case may be, to the State Pool, as prescribed in Table-I below:
Table-I: Deviation Charges in case of under or over-injection for sale of power within the State S.No. Absolute Error in the 15- Deviation charges payable Minute time block to the State DSM pool
1. <=15% At Rs.0.50 per unit for the shortfall or excess of energy for absolute error beyond 15% and upto 25%.
2. >25% but <=35% At Rs.0.50 per unit for the shortfall or excess energy beyond 15% and up to 25% + Rs.1.0 per unit for balance energy beyond 25% and upto 35%
3. > 35% At Rs.0.50 per unit for the shortfall or excess energy beyond 15% and upto 25% + Rs.1.0 per unit for shortfall or excess energy beyond 25% and upto 35% + Rs.1.50 per unit for balance energy beyond 35% (Downloaded on 28/06/2019 at 07:15:20 AM) (8 of 41) [CW-18587/2018]
13. The petitioner Association despite challenging the Regulations, has come with a specific case that the Association is not against the forecasting and scheduling as such. It has rather conceded that its members are major sufferers due to unscheduled cuts, non-taking of the powers by the DISCOM despite good generation in the peak hours, but has raised grievance that by way of the Regulations of 2017, the Commission has unilaterally implemented the same without inviting suggestions/objections/comments etc. from the energy generators and other affected parties, as stated in para No.26 of the memo of writ petition.
14. While questioning the legality and propriety of the Regulations of 2017, learned counsel for the petitioner-Association submitted that the respondents have restricted the choice of selection of QCAs from amongst four agencies and have compelled the members to choose one of them. It has been contended that none of the QCAs suggested by the respondents is technically competent. A grievance has been raised that the respondents have given more weightage to the financial capacity than their technical expertise, while selecting QCAs and none of them have any expertise of forecasting 500 MW for a year. Work of QCA become more daunting in a terrain like Western Rajsthan, where climatic conditions are more unpredictable than other parts as the desert areas witness many sand storms and the wind velocity in this part is also highly variable making it almost impossible to predict.
15. Learned counsel further contended that the Regulations have been framed in such a fashion that it is the SLDC, which is (Downloaded on 28/06/2019 at 07:15:20 AM) (9 of 41) [CW-18587/2018] required to satisfy itself on the credentials of the QCA and the generator is left at the mercy of the QCA. Without being satisfied about the technical expertise or capacity to forecast, the generator has to accept one out of the available four registered QCAs.
16. Though the petitioner has found fault with almost every Regulation of the Regulations, but during the course of arguments, learned counsel has confined his grievance towards generators' compulsion to opt for QCA and the deviation charges prescribed vide Regulation 18 of the Regulations of 2017.
17. Calling Regulations of 2017 in question, Mr. Chirania submitted that huge deviation charges have been prescribed by the Regulations that too in both the eventualities, not only in a case when the injection is more but also when it is less than the scheduled generation. He vehemently argued that deviation charges of Re.0.50 per unit and more is excessive and arbitrary.
18. Counsel for the petitioner pointed out that though scheduling part is to be done by the generators, but the same is totally dependent upon the forecasting to be provided by the QCA. If the input for scheduling i.e. forecasting about the wind is improper or inaccurate, the scheduling or the forecasting of the generation given by the generator is bound to go wrong. According to the learned counsel for the petitioner, the members of the petitioner Association are sought to be penalized for the fault of QCA in not being able to correctly forecast the weather or wind.
19. Highlighting the problems and lack of expertise/experience of the QCA, learned counsel for the petitioner submitted that none of the QCAs are having experts or expertise to predict or forecast the weather with accuracy. He submitted that their estimation or (Downloaded on 28/06/2019 at 07:15:20 AM) (10 of 41) [CW-18587/2018] forecasting of weather is only an hypothesis. He repeatedly and rhetorically asserted that no instrument or technique is available, with which a proper forecasting of the wind can be made, particularly in a terrain like Western Rajsathan.
20. Mr. Chirania submitted that the members of the petitioner Association have separate Power Purchase Agreement, wherein all financial terms have been set out. By virtue of Regulation 18 of the Regulations of 2017, the respondent RERC has prescribed deviation charges, as a result whereof huge amount will have to be paid by the generators, which would adversely affect their financial health. According to him, levy of deviation charges overrides or tramples upon the terms of supply of energy, duly finalized and spelt out in separate Power Purchase Agreement executed between the members and the RRVPNL.
21. According to him, when the Regulations have been made applicable from 01.01.2018, the Regulation 18 of the Regulation relating to deviation charges, if at all to be applied, can be applied to the Power Purchase Agreements executed after the date of coming into force of the Regulations of 2017, i.e. 01.01.2018.
22. Learned counsel for the petitioner contended that since there is no stipulation like the deviation charges in the existing Power Purchase Agreement signed by the generators with the RRVPNL, even going by Clause 11 of the Agreement, Regulation 18 of the Regulations of 2017 cannot be made applicable.
23. Learned counsel for the petitioner further contended that Regulation 18 of the impugned Regulations is arbitrary and contrary to the Power Purchase Agreement and the same deserves to be declared ultra-vires the Constitution.
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24. Inviting attention of the Court towards various Regulations of the definition Regulation 2 of the Regulations, namely, 'deviation' defined in Regulation 2(i), pooling station defined in 2(n), QCA defined in Regulation 2(o) of the Regulations, he contended that the Regulations are not clear as to who will act as a QCA, what will be its role and what shall be the modalities. Learned counsel for the petitioner asserted with certainty that all the members of the Association would try to give the highest generation of the energy and would not like to deviate from the scheduling given by them. He urged that the generators are required to give a day ahead scheduling, in which they are bound to err. He urged that there is every possibility of deviation in scheduling and the actual injection or generation; as it is very difficult to forecast and predict the generation of the electricity, more particularly when it comes to generation by wind energy and that too in a State like Rajasthan. He alleged that Regulation 18 of the Regulations of 2017 is a double edged sword, inasmuch as it penalizes the generator in both the situations alike; whether the injection is more or less than the scheduled generation.
25. Learned counsel took us through various correspondences and pointed out that it was the instructions or directions of the Central Electricity Regulatory Commission (CERC) to make Regulations in relation to the generation and sale of electricity within the State. He submitted that the RERC has promulgated Regulations notwithstanding the fact that implementing agency itself was not equipped. He argued that the Regulations of 2017 are not implementable as the same are incomplete. In support of his arguments, he contended that though the Regulations have (Downloaded on 28/06/2019 at 07:15:20 AM) (12 of 41) [CW-18587/2018] been brought into force from 01.01.2018, still the respondents have been able to generate demand notice with respect to the deviation charges for two months only, because they are not having correct figure of deviation of each individual generator. It was asserted that the framework brought in by the Commission is nothing but an endeavor to fill the lacunae left in the Regulations, while the Regulations have been framed with the view to penalize the generators of power.
26. He tried to impress upon us that even Indian Metrological Department is not in a position to give accurate forecasting of the wind. According to learned counsel for the petitioner, the impugned Regulations, which provide for a day ahead scheduling, and imposition of deviation charges in the event of deviation is highly arbitrary.
27. Mr. Ravi Bhansali, learned Senior Counsel appearing on behalf of the other petitioner, Tanot Wind Power Ventures Pvt. Ltd. invited attention of the Court towards para No.23 of his writ petition, wherein a comparative chart has been given showing the revenue as per earlier mechanism vis-à-vis a revenue as per the new mechanism. With the help of comparison given in the said table, he contended that after coming into force of the new Regulations, per unit revenue or price payable to the generator will be substantially reduced as against the rates already fixed, i.e. Rs.5/- per unit. He submitted that Regulation 18 of the Regulations is a subterfuge to generate revenue for the RRVPNL or to curtail the rightful entitlement of the generators. Learned Senior Counsel submitted that the petitioner had ventured to install a wind farm and invested a huge amount keeping in mind (Downloaded on 28/06/2019 at 07:15:20 AM) (13 of 41) [CW-18587/2018] the assured rate of Rs.5/- per unit, without anticipating that the respondents would bring in the impugned legislation, substantially reducing the amount payable to it. Rajasthan was an electricity scarce State, when the petitioner had installed its wind farm and the respondents were inviting entrepreneurs to establish wind farms, and when there is sufficient generation of electricity, now they have taken a U-turn. Finding the rates fixed in the power purchase agreements unprofitable, they have deviced a way to reduce the rates under the guise of deviation charges. He also echoed the Association's voice that the petitioner has to depend upon the QCA for weather forecasting and that for the fault of the QCA, an agency thrusted upon it, the petitioner cannot be saddled with heavy penalty under the garb of deviation charges. He argued that Regulation 5 of the Regulations provides that the price to be paid by DISCOM shall be net of all GoR and local taxes and duties as leviable on generation and/or sale of electricity and the same shall be based on the tariff attached as Annexure-B to the Regulations. Taking the Court through the tariff contained therein, he argued that neither the Regulation 5 envisages deviation charges leviable under Regulation 18 nor does the tariff shown in Annexure-B of the Regulation takes into account the deviation charges. As such, the deviation charges levied under Regulation 18 are hidden deduction for the tariff payable to a generator and the same is impermissible in law.
28. Mr. Vikas Balia, learned counsel appearing for the third petitioner (D.B. Civil Writ Petition No.2623/2018, M/s. Ramgad Minerals and Mining Ltd.), at the outset pointed out that neither (Downloaded on 28/06/2019 at 07:15:20 AM) (14 of 41) [CW-18587/2018] the petitioner company is a Member of the Indian Wind Power Association nor has it entered into an agreement with the QCA, hence his case deserves separate hearing as he has raised certain additional grounds albeit for assailing the Regulations.
29. At the outset, he submitted that there are three factors; first forecasting, second scheduling and third deviation, as far as the Regulations of 2017 are concerned and the generator has control over none. Inviting attention towards Regulation 6 of the Regulations, he submitted that the same provides for methodology for scheduling of the energy by the generators connected to the State Grid so also the methodology of handling deviation of such wind and solar energy generators, but it does not provide any mechanism for forecasting. By virtue of of such provision, the respondents have conveniently passed on the SLDC's burden of forecasting to the QCAs and/or to the generators, whereas the same is an essential function, rather obligation of the SLDC. He submitted that Regulation 7 of the Regulations mandates SLDC to undertake forecasting of the power, i.e. expected to be injected into the State Grid with an objective of ensuring secure grid operation by planning for the requisite balancing of resources. He pointed out that the said Regulation 7 of the Regulations of 2017 provides the QCA or wind and solar generators will have the option of accepting the SLDC's forecasting for preparing its schedule or carry out their own forecasting for preparing schedule to be given to the SLDC, but by dint of these Regulations, the respondents have not only shifted the onus of forecasting upon the QCAs but in a way have compelled the generators to engage (Downloaded on 28/06/2019 at 07:15:20 AM) (15 of 41) [CW-18587/2018] one out of the four QCAs registered with the respondents. According to him, regardless of the fact that the Regulation mandates the SLDC to carry out forecasting, the respondents have forced the petitioner and other power generators to enter into an agreement with the QCA, realizing that the SLDC, which is one of its arms, is not in a position to carry out forecasting accurately.
30. Mr. Balia invited our attention towards explanatory memorandum for the draft regulations, published by the respondents prior to bringing in the impugned Regulation, particularly Clause 3.2 thereof to highlight that the respondents themselves were aware that forecasting in case of wind energy is not possible as against the solar energy, yet, they have framed combined regulations without providing separate yardsticks for wind energy and solar energy. With this anamoly, the Regulations of 2017 are arbitrary being enforced without due application of mind, he argued. Learned counsel in this regard referred to and relied upon clause 3.2.1 of the explanatory memorandum, which we consider beneficial to reproduce hereunder:
"3.2.1 Solar plants are now mandated to undertake forecasting. Notwithstanding the lack of indigenous experience, solar forecasting methodologies are quickly maturing worldwide and have higher accuracy levels than wind forecasting. With the present aim for ambitious solar power targets, this is the opportune moment to ensure that these plants connect to the grid in a sustainable and streamlined manner."
31. We were then navigated through "Procedure for Implementation of the Framework of Forecasting and Scheduling for renewable energy (RE) Generating Stations (wind and solar)", (hereinafter referred to as 'the framework'). It was contended that Clauses (8) and (9) of the framework do not prescribe any penalty (Downloaded on 28/06/2019 at 07:15:20 AM) (16 of 41) [CW-18587/2018] or fine upon the QCA, if such QCA mis-judge or go wrong in the forecasting. He raised grievance qua Clause 8(2) of the framework by saying that it is totally tilted in favour of the QCAs, so much so that in case of non-performance of function by QCA, it provides that the generator shall not, in any manner, be absolved from meeting its responsibilities under the Regulations.
32. He drew our attention towards Clause (9) of the framework, and asserted that it is the SLDC whih is responsible for scheduling, communication, coordination with QCA and RE generators and it is enjoined upon the QCAs to carry out forecasting and publish the same on its website.
33. Main thrust of the challenge was for Regulation 18 of the Regulations, which prescribes deviation charges upon the generator on failure to meet with the scheduling. Learned counsel branded them to be patently arbitrary and violative of fundamental rights of the generators guaranteed under Articles 14 and 19(1)(g) of the Constitution of India. He submitted that the impugned provision inflicts penalty in the form of standard contract without any notice or adjudication, hence the same deserves to be struck down. He argued that the Regulations of 2017 has an effect of changing the terms of power purchase agreement, duly executed between petitioner and the RVVPNL.
34. He submitted that the petitioner has been coerced or forced to pay additional amount in the name of deviation charges, as the Regulations of 2017 have been made applicable to the existing power purchase agreement unilaterally, without notice to the generators let apart seeking their consent. In support of the argument that the condition deserves to be quashed as it is (Downloaded on 28/06/2019 at 07:15:20 AM) (17 of 41) [CW-18587/2018] unconscionable and arbitrary, learned counsel relied upon the judgment of Hon'ble the Supreme Court rendered in the matter of LIC of India & Anr. Vs. Consumer Education and Research Centre & Ors., reported in (1995) 5 SCC 482.
35. Petitioner's learned counsel argued that by way of Regulations, the respondents may be justified in requiring the generator to provide a week ahead or day ahead scheduling, but asking for the scheduling for every 15 minutes and that too with such exactitude is asking for too much. A generator can schedule its generation in case of traditional source of generation but as far as generation from wind energy is concerned, the scheduling is totally dependent upon forecasting of wind and since wind velocity is not in the hands of generator, neither forecasting nor scheduling with the desired precision is possible. According to him, when the requisite ingredient or input for scheduling is not in the command or control of the generator, he cannot be penalized for the error in scheduling, which may vary as a result of variation in such input data or other hordes of factors out of his control.
36. Contending that by way of Regulation 18, the respondents have provided deviation charges, which in a sense is a penalty, Mr. Balia submitted with concern that the respondents have evolved a source of generating revenue in the guise of deviation charges. He argued that the penalty cannot be made a source of revenue and respondents' such attempt is impermissible in law.
37. Assailing the legislative competence of the impugned regulations, learned counsel submitted that though the Regulations do not refer to specific source of power available to the Commission under the Electricity Act and the same uses (Downloaded on 28/06/2019 at 07:15:20 AM) (18 of 41) [CW-18587/2018] generic expression "in exercise of the powers conferred under Section 181 of the Electricity Act, 2003", but the same appears to have been enacted under the residuary power available to the Commission under Section 181(2)(zp) of the Act of 2003. He argued that neither Section 181(2)(zp) nor any other provision authorizes Regulatory Commission to levy or impose such penalty or tax. According to him, the impugned deviation charges cannot be claimed to be a fee, incidental to regulation and the same is thus nothing less than a tax or penalty.
38. Advancing his argument further, he submitted that the power to levy tax on electricity is beyond the legislative competence of the Parliament. Entry No.38 of List III of the 7 th Schedule and so also the Entry No.47 of the same List authorizes the Central and the State Government to levy fee with respect to electricity. As far as power to levy tax on consumption and sale of electricity is concerned, the repository of such power is Entry No.53 of List II of the 7th Schedule and such power vests with the State. The impugned Regulation framed by the RERC imposing penalty is, therefore, clearly outside the ambit of the competence of the RERC or the Central Government and thus the Regulations deserves to be declared ultra-vires, being violative of Articles 246 and 265 of the Constitution of India.
39. Mr. M.S. Singhvi, learned Senior Counsel appearing on behalf of the respondents, vehemently opposed the petitioners' contentions by stating that almost all the submissions and the arguments advanced by the petitioners are dehors the pleadings. He argued that Tanot Wind Power Ventures Pvt. Ltd. cannot (Downloaded on 28/06/2019 at 07:15:20 AM) (19 of 41) [CW-18587/2018] maintain a separate petition, when the Indian Wind Power Association is already espousing the cause of all the members, including the petitioner.
40. He contended that going through the pleadings of the writ petition filed by the Association, one fails to comprehend as to on what counts, the challenge to the Regulations of 2017 has been made. He submitted that the Regulations are having statutory force and its challenge can be entertained only if the petitioner shows them to be violative of certain statutory provision or highly arbitrary. Learned Senior Counsel argued that notwithstanding the fact that the arguments advanced by the petitioners are dehors the pleadings, no substantial and sustainable ground has been canvased by the petitioners, for which Regulations of 2017 can be declared unconstitutional or otherwise invalid.
41. Averting to the purported flaws pointed by the petitioners, learned Senior Counsel submitted that even if it is presumed that there are certain deficiencies or lacunae in the Regulations or certain difficulties in their implementations, the Regulations do not become bad, invalid, unconstitutional or otherwise illegal. All the procedural hazards or operational difficulties whatever have been canvassed before this Court, can well be brought or agitated before the RERC itself, which has expertise and requisite power even to relax the Regulations in exercise of power available to it under Regulations 24 and 25.
42. Expanding the preliminary objection, Mr. Singhvi submitted that Regulations of 2017, particularly Regulations 24, 25 and 26 of the Regulations provide in-house mechanism for redressal of the (Downloaded on 28/06/2019 at 07:15:20 AM) (20 of 41) [CW-18587/2018] grievance which the petitioners have raised before this Court. He submitted that whatever has been alleged by the petitioners, even if accepted as such, the same do not render the Regulations to be ultra-vires the Electricity Act or the Constitutional provisions. If the petitioners have any grievance qua these Regulations, they should well approach the RERC, which has been conferred with the power not only to relax the Regulations but also to vary, alter or amend any of the provisions of these Regulations.
43. He pointed out that the Indian Wind Power Association had though filed a review petition, which is evident from the averments made at page No.3 of Writ Petition No.18587/2018, but did not pursue the same, for the reasons best known to it. He argued that the petitioners have rushed to this Court which definitely has a power to declare the Regulations as ultra-vires but does not have the desired level of technical expertise on the subject, which is required to address the petitioners' concerns or to give the reliefs sought for by the petitioners.
44. We do not find it out of context to reproduce Part-5 of the Regulations, which encompasses the provisions relied upon by learned Senior Counsel for the respondents:-
"Part-5 Miscellaneous:
24. Power to Relax The Commission may by general or special order, for reasons to be recorded in writing, and after giving an opportunity of hearing to the parties likely to be affected by grant of relaxation, may relax any of the provisions of these regulations on its own motion or on an application made before it by an interested person.
25. Power to issue directions"
If any difficulty arises in giving effect to these regulations, the Commission may on its own motion or (Downloaded on 28/06/2019 at 07:15:20 AM) (21 of 41) [CW-18587/2018] on an application filed by any affected party, issue such directions as may be considered necessary in furtherance of the objective and purpose of these Regulations.
26. Power to amend The Commission, may at any time, vary, alter, modify or amend any provision of these Regulations."
45. While making the aforesaid submission that the Regulatory Commission has enough power to redress the grievance of the petitioners, including power to amend the same, learned Senior Counsel however, conceded that the Regulatory Commission does not have power to test the validity of the Regulations and the same is required to be examined by this Court in its power of judicial review under Article 226 of the Constitution of India. He placed before under Section the judgment of Hon'ble the Supreme Court rendered in the case of PTC India Ltd. Vs. Central Electricity Regulatory Commission, reported in (2010) 4 SCC 603, so as to apprise us with correct position of law.
46. Learned Advocate General contended that much has been said about the lack of technical expertise and infrastructure, including non-availability of equipments with the QCAs and consequential financial implication upon the members of the petitioner Association on the failure of such QCAs', but all such allegations have been hurled at their back. The petitioners have not chosen to implead the QCAs as a party respondent. The petitioners' allegation that the QCAs do not have equipments or expertise to forecast the wind velocity, cannot be gone into or considered in absence of the QCAs. He pointed out that all the members of the petitioner Association, and so also the other writ (Downloaded on 28/06/2019 at 07:15:20 AM) (22 of 41) [CW-18587/2018] petitioner Tanot Wind Power Ventures Pvt. Ltd. have chosen one QCA out of the four QCAs, registered with the RERC and have entered into agreements, yet none of them (QCAs) is before this Court to respond to the allegations about their incompetence. According to Mr. Singhvi, the petitioners' writ petitions are liable to be rejected for non-joinder of necessary parties.
47. While reading para No.10 of the writ petition of the Association, Mr. Singhvi pointed out that it is the assertion of the Association that as some of the members are in a position to do their own forecasting and scheduling,they are not interested to appoint QCAs and that the QCAs cannot be thrusted upon generators, whereas while arguing their case, the petitioners have contended that neither with the SLDC nor with the QCAs, nor with them, technique to forecast the wind is available. According to him, the arguments advanced were contrary to the pleadings, and thus cannot be gone into, urged Senior Counsel.
48. Learned Senior Counsel asserted that the Regulations nowhere compel the generators to engage a QCA and a generator is free to have its own forecasting and scheduling. As such, the entire case of the petitioners is factually incorrect, besides being baseless. Mr. Singhvi submitted that the petitioners are neither clear about their grievance nor is their stand firm. At some place Association has asserted that the QCAs are not in a position to forecast and that they want to have their own forecasting, whereas Para 26 of the writ petition demonstrates that it is the assertion of the Association that they are in support of forecasting and scheduling. Highlighting these conflicting and self-defeating stand, learned Senior Counsel submitted that one fails to (Downloaded on 28/06/2019 at 07:15:20 AM) (23 of 41) [CW-18587/2018] comprehend as to what is the stand of the petitioner Association and what is their grievance, for which they have approached this Court.
49. As far as QCAs are concerned, learned Senior Counsel tried to convince us that the qualification requirements of QCAs are well defined in the Regulations itself and each QCA is required to have requisite qualification and expertise, including reasonable financial status to qualify for securing registration with the respondents or SLDC. He assured that all the four QCAs registered with the respondents are having Pan-India presence and they are successfully performing their duties in all States, having different geographical and climate conditions. Mr. Singhvi further pointed out that provisions like the present Regulations prescribing deviation charges, exists not only in the Regulations framed by the CERC but also in the Regulations framed by other States and despite having all India presence of the wind power generators, nowhere such challenge has been made or if made, has succeeded.
50. It was further argued that the petitioners have leveled bald allegation that the QCAs are not having technical expertise or are unable to perform their responsibilities, without pin pointing any technical flaw with a QCA or bringing on record any such failure on the part of the QCAs. He argued that entire petition is based on apprehension, conjectures and surmises and the same is bereft of requisite pleadings, for which it is liable to be dismissed.
51. Mr. Singhvi submitted that Clause 11 of the Power Purchase Agreement is so drafted that it takes into its sweep not only the existing Rules and Regulations, but also makes all amendments (Downloaded on 28/06/2019 at 07:15:20 AM) (24 of 41) [CW-18587/2018] thereto and new enactments applicable to the parties automatically applicable. According to him, by virtue of Clause 11 of the Power Purchase Agreement, the Regulations of 2017 have been made applicable and in absence of any challenge to such Clause, petitioners' challenge to the provisions of Regulations is an exercise in futality.
52. Learned Senior Counsel then relied upon the judgment of Hon'ble the Supreme Court in the case of Central Power Distribution Company and Ors. Vs. Central Electricity Regulatory Commission & Ors., reported in (2007) 8 SCC, 197 and submitted that by this judgment, the power to frame Regulations so also the levy of deviation charges has been held to be valid. He pointed out that Hon'ble the Supreme Court while dealing with the identical Regulations framed by the Central Electricity Regulatory Commission, has upheld not only the Regulations but also the 'Unscheduled Interchange' levied thereunder, which provisions are para-meteria to the Regulations under consideration and the charges levied vide Regulation 18 of the Regulations.
53. Mr. Vikas Balia, appearing for the third petitioner, i.e. Ramgarh Mineral and Mining Ltd., in rejoinder, contended that the stand of the respondents that petitioner No.1 and its members had, in principle, agreed to engagement of QCAs, cannot turn around and lay challenge to the Regulation, is untenable in law.
54. While maintaining that neither his client is a Member of the Association nor has it consented to such provision, learned counsel contended that even if some of the members have agreed to the appointment of QCAs and made admission in this regard, (Downloaded on 28/06/2019 at 07:15:20 AM) (25 of 41) [CW-18587/2018] petitioner and even other members of the Association cannot be precluded from challenging the vires of the Regulations, as the validity of any legislation is not dependent upon any concession.
55. As regards judgment of Hon'ble the Supreme Court in the case of Central Distribution Company (supra), he submitted that the said judgment cannot be taken as a binding precedent in the present case, inasmuch as the Regulations under consideration before Hon'ble the Supreme Court were with respect to traditional source of energy, i.e. thermal power, the generation whereof is not dependent upon any unpredictable variables, whereas the generation of power through wind energy is primarily dependent upon wind velocity, which is highly speculative. The principles and reasoning for upholding UI Charges in case of thermal power cannot decide the fate of the impugned Regulations, was the crux of Mr. Balia's submissions.
56. As regards argument of the learned Advocate General that the petitioners' writ petitions are not maintainable, as they have not challenged Clause (11) of the Power Purchase Agreement, he submitted that since the Regulations of 2017 itself has been challenged, there was no occasion or requirement for the petitioners to challenge Clause (11) of the Power Purchase Agreement. He argued that Clause (11) of the Power Purchase Agreement only makes the change in any law applicable to the existing power purchase agreement, but when the Regulations themselves have been assailed on the ground of being arbitrary and unconstitutional, they will cease to apply to the petitioners' (Downloaded on 28/06/2019 at 07:15:20 AM) (26 of 41) [CW-18587/2018] existing power purchase agreement, once they are declared unconstitutional.
57. Reiterating the petitioners' grievance, he submitted in other words that the cost in the form of deviation charges cannot be saddled on the petitioners for someone else's fault. Elaborating his argument further, he submitted that a generator will have to depend upon the forecasting done by other agency, namely, QCA, and if the forecasting done by the QCA turns out to be wrong because of the wageries of the nature, a generator cannot be burdened with the deviation charges. As such, Regulation 18 of the Regulations is arbitrary and violative of Articles 14 and 19(1)
(g) of the Constitution of India, emphatically argued learned counsel.
58. Thereafter, learned counsel for the petitioner pointed out numerous other grievances of the petitioner, which were all procedural and operational hassels, such as; (i) choice of QCA is not in petitioner's domain, (ii) no mechanism for registration has been provided, (iii) no recording of metering is carried out, (iv) there is no mechanism of be-pooling etc.
59. Responding to the argument advanced by Mr. Singhvi that the petitioners have not challenged the CERC Regulations, which are the foundation stone of the impugned Regulations of 2017, Mr. Balia submitted that the petitioners were not required to challenge the CERC Regulations as they are applicable to inter-State generation and supply of power and not to the petitioners' arrangements whose supply and sale is limited within the confines of the State of Rajasthan.
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60. He argued that if the deviation charges in question are not tax, fee or penalty, as contended by the respondents, then the only category in which they can possibly fall is "damages"; and if the deviation charges are to be reckoned as damages, the respondents are required to show, at least to this Court; as to what is the loss suffered or likely to be suffered by them, in case the scheduling made by a generator turns down to be erroneous or inaccurate. He submitted that recovery of such damages, without there being any corresponding loss or harm to the respondents, and that too in a mechanical manner by way of a mathematical formula, is per se arbitrary. The impugned Regulation 18 prescribing the deviation charges, thus deserves to be declared violative of Articles 14 and 19(1)(g) of the Constitution of India.
61. In support of his argument that the deviation charges are penalty, he asserted that even the respondent No.5 has admitted in express terms that the deviation charges are penalty, which is evident from perusal of para No.14(F) of the reply. We deem it appropriate to reproduce the same hereunder:-
"In the respectful submissions of the answering respondent, the condition of depositing penalty as mentioned in the regulation is just to enforce discipline in the Grid that this regulation has been put in place. The QCA's have the requisite expertise to forecast wind energy. Clause 81, 82, 83 of the order sheet dated 14.09.2017 clearly emphasis the need for forecasting of RE power. The intent if very clear in the regulation which is instill grid discipline among the generators. The charges are for those who shall not maintain grid discipline."
62. Similar was the stand taken by the respondent No.3 in para No.14 of its reply, which reads thus:
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(28 of 41) [CW-18587/2018] "In the respectful submissions of the answering respondent, the condition of depositing penalty as mentioned in the regulation is just to enforce discipline in the Grid that this regulation has been put in place. The QCA's have the requisite expertise to forecast wind energy. Clause 81, 82, 83 of the order sheet dated 14.09.2017 clearly emphasis the need for forecasting of RE power. The intent if very clear in the regulation which is instill grid discipline among the generators. The charges are for those who shall not maintain grid discipline."
63. Learned counsel further submitted that the petitioner does not dispute that the scheduling is desirable, but the same does not necessarily mean that it is possible and feasible in the present situation. He asserted that the petitioner's pleading is that the forecasting is neither possible nor feasible, which is evident from perusal of para No.81 of the order-sheet dated 14.09.2017 (Annex.1), which records as under:-
"Wind and solar energy sources are variable, uncertain and intermittent in nature, which not only poses a challenge to the system operator in operation of the power system but also in maintaining the load- generation balance in it at any given point of time. Thus, integration of variable generation from solar and wind sources is a real challenge for a system operator which is to ensure reliability and security of the power system. In order to facilitate large scale integration of generation from such sources, the Forecasting and Scheduling of electricity generated from these sources is needed."
While reading above referred para No.81, he urged that the respondents, despite being alive to the fact that wind and solar energy sources are variable, uncertain and intermittent in nature and such sources have their own challenges, have proceeded to frame and enforce the Regulations, which can be implemented only in ideal situation. For seemless implementation of these (Downloaded on 28/06/2019 at 07:15:20 AM) (29 of 41) [CW-18587/2018] Regulations, the basic facilities, equipment and software etc. are sine qua non and in absence of such facilities hasty implementation of these Regulations and hurling deviation charges, being oblivious of the ground realities, had adversely impacted the viability of generation from wind power and survival of wind plants.
64. Learned counsel thereafter argued that the respondent RERC, in a given case, can bring in appropriate legislation and the same may be permitted to apply to an existing agreement; but in the instant case, since the RERC is a party to the Power Purchase Agreement, it is discharging dual role. The Commission is acting as a rule making authority on the one hand and on other it is a party to the contract, hence it cannot introduce a legislation and amend the terms of the agreement, unilaterally to serve its own interest or cause. Exercise of legislative power in such a manner is clearly a colourable exercise of power; fervently argued learned counsel.
65. Heard learned counsel for the parties and perused the material available on record.
66. The basic reason for which the petitioners have come before this Court, while bye-passing the statutory and other remedies available to them, is the challenge to the Constitutional validity of the Regulations of 2017. In light of the judgment of Hon'ble the Supreme Court rendered in case of PTC India Ltd. Vs. Central Electricity Regulatory Commission, reported in (2010) 4 SCC 603, this issue remains no more res integra that the validity of Regulations, which are statutory in nature, can be challenged only (Downloaded on 28/06/2019 at 07:15:20 AM) (30 of 41) [CW-18587/2018] before this Court, in its power of judicial review conferred by Article 226 of the Constitution of India. The other fora provided under the Regulations or the Electricity Act, 2003 can neither examine the RERC's competence to frame Regulations nor can they pronounce upon its validity. As such, the writ petitions at hand are maintainable, so long as they are confined to challenging the validity of the Regulations.
67. Then comes the moot question, as to whether Regulation 18 and other Regulations are arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution of India, so as to be struck down, and/or they are ultra-vires the provisions of Electricity Act, 2003, as alleged by the petitioners.
68. Much has been said/claimed by the petitioners about the Regulations of 2017, more particularly Regulation 18 thereof with a view to get them declared arbitrary and violative of Article 14 of the Constitution of India. Crux of the petitioners' contentions in this regard has been that Regulation 18 provides for deviation charges in case a generator fails to adhere to the schedule given by it. According to the petitioners, the scheduling of the generation of electricity is totally subservient of the forecasting, which is neither possible nor feasible for want of technical expertise or mechanism. As per the petitioners even the QCAs are not in a position to predict or forecast wind velocity and consequential power generation.
69. In our considered opinion, mere fact that the generators as well as the QCAs are not in a position to forecast wind velocity with certitude, by itself is not enough to render the requirement of scheduling to be arbitrary or violative of Article 14 of the (Downloaded on 28/06/2019 at 07:15:20 AM) (31 of 41) [CW-18587/2018] Constitution of India. While refraining from recording any finding in this regard, even if it is presumed that such technology or expertise is not available, the petitioners should well be advised to approach RERC for redressal of their grievance or for its intervention to ensure procurement or installation of requisite equipment etc. to carry out accurate forecasting or to absolve the generators from the rigours of the deviation charges on failure to meet the scheduled or targeted production.
70. It is true that the statutory provision subordinate or primary can be declared unconstitutional on the anvil of Article 14 of the Constitution, in case the Court comes to a conclusion that any particular provision of the Act is manifestly arbitrary. But the same can be done only in those cases where the extent of arbitrariness or unreasonableness is so apparent and glaring that the Courts have no other option but to pronounce them to be arbitrary and violative of Article 14 of the Constitution of India. In other words, in a bid to declare the Regulations to be arbitrary and unconstitutional, the petitioners are required to demonstrate and prove that the same are so arbitrary and one sided that any legislative body having rational and judicious approach could not have enacted the same.
71. Having gone through the contentions and pleadings of the parties, we do not find that the provisions of Regulations including Regulation 18 to be so unreasonable or capricious impinging upon the fundamental rights including right to carry on trade guaranteed by the Constitution.
72. By way of the arguments advanced and contentions raised, the petitioners have tried to establish that they have been (Downloaded on 28/06/2019 at 07:15:20 AM) (32 of 41) [CW-18587/2018] compelled to engage one of the QCAs registered with the respondents and provide a week ahead or a day ahead schedule of their generation. On their failure to match their injection in tune with the scheduling, they are liable to pay deviation charges as prescribed under Regulation 18 of the Regulations. In our considered opinion, requirement of wind energy Generators to provide a week ahead or a day ahead scheduling, is well within the powers of RERC to regulate the forecasting, scheduling and generation of the electricity. Merely because precise forecasting is not possible or feasible as alleged by the petitioners, the provisions requiring such scheduling cannot be held as arbitrary. Similarly, imposition of deviation charges by Regulation 18 in the event of failure to adhere to the scheduled generation can also not be declared arbitrary.
73. It is altogether a different aspect that looking to the different geographical and climatic conditions peculiar to the western part of the State, in a case of generation by wind energy, the imposition of deviation charges may turn out to be excessive, but then also, they cannot be held to be arbitrary until and unless they are found to be confiscatory.
74. Excerpts from the following judgments support our above view:
(I) R K Garg Vs Union of India [(1981) 4 SCC 675]:
"Another rule of equal importance is that laws relating to economic actives should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrine or straight jacket formula and (Downloaded on 28/06/2019 at 07:15:20 AM) (33 of 41) [CW-18587/2018] this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislature judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Doud 354 US 457 where Frankfurter, J. said in his inimitable style:
In the utilities, tax and economic regulation cases, there are good reasons for judicial self- restraint if not judicial difference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events-self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.
The court must always remember that "legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry" that exact wisdom and nice adoption of remedy are not always possible and that "judgment is largely a prophecy based on meagre and un- interpreted experience". Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There, may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture v. Central Reig Refining Company 94 Lawyers Edition 381 be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on (Downloaded on 28/06/2019 at 07:15:20 AM) (34 of 41) [CW-18587/2018] its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable mendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues.
It is true that certain immunities and exemptions are granted to persons investing their unaccounted money in purchase of special bearer bonds but that is an inducement which has to be offered for unearthing blackmoney. Those who have successfully evaded taxation and concealed their income or wealth despite the stringent tax laws and the efforts of the tax department are likely to disclose their unaccounted money without some inducement by way of immunities and exceptions and it must necessarily be left to the legislature to decide what immunities and exemptions would be sufficient for the purpose. It would be outside the province of the court to consider if any particular immunity or exemption is necessary or not for the purpose of inducing disclosure of black money. That would depend upon diverse fiscal and economic considerations based on practical necessity and administrative expediency and would also involve a certain amount of experimentation on which the Court would be least fitted to pronounce. The court would not have the necessary competence and expertise to adjudicate upon such an economic issue. The court cannot possibly assess or evaluate what would be the impact of a particular immunity or exemption and whether it would serve the purpose in view or not. There are so many imponderables that would enter into the determination that it would be wise for the court not to hazard an opinion where even economists may differ. The court must while examining the constitutional validity of a legislation of this kind, "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the court must always bear in mind the constitutional proposition enunciated by the Supreme Court of the United States in Munn v. Illinois 94 U.S. 13 namely, "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies". The court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to be palpably arbitrary. "(Downloaded on 28/06/2019 at 07:15:20 AM)
(35 of 41) [CW-18587/2018] (II) Bhavesh D Parish Vs Union of India [(2000) 5 SCC 471]:
"The services rendered by certain informal sectors of the Indian economy could not be belittled. However, in the path of economic progress, if the informal system was sought to be replaced by a more organised system, capable of better regulation and discipline, then this was an economic philosophy reflected by the legislation in question. Such a philosophy might have its merits and demerits. But these were matters of economic policy. They are best left to the wisdom of the legislature and in policy matters the accepted principle is that the courts should not interfere. Moreover in the context of the changed economic scenario the expertise of people dealing with the subject should not be lightly interfered with. The consequences of such interdiction can have large-scale ramifications and can put the clock back for a number of years. The process of rationalisation of the infirmities in the economy can be put in serious jeopardy and, therefore, it is necessary that while dealing with economic legislations, this Court, while not jettisoning its jurisdiction to curb arbitrary action or unconstitutional legislation, should interfere only in those few cases where the view reflected in the legislation is not possible to be taken at all."
(III) Shayara Bano & Ors. Vs Union of India & Ors. [(2017) 9 SCC 1]:
"95. On a reading of this judgment in Natural Resources Allocation, IN re, Spe ial Reference No.1 of 2012 [(2012) 10 SCC 1], it is clear that this Court did not read McDowell (supra) as being an authority for the proposition that legislation can never be struck down as being arbitrary. Indeed the Court, after referring to all the earlier judgments, and Ajay Hasia (supra) in particular, which stated that legislation can be struck down on the ground that it is "arbitrary"
Under Article 14, went on to conclude that "arbitrariness" when applied to legislation cannot be used loosely. Instead, it broad based the test, stating that if a constitutional infirmity is found, Article 14 will interdict such infirmity. And a constitutional infirmity is found in Article 14 itself whenever legislation is "manifestly arbitrary"; i.e. when it is not fair, not reasonable, discriminatory, not transparent, capricious, biased, with favoritism or nepotism and not in pursuit of promotion of healthy competition and equitable treatment. Positively speaking, it should conform to norms which are rational, informed with reason and guided by public interest, etc."
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(36 of 41) [CW-18587/2018] (IV) In Indian Express Newspapers v. Union of India, (1985) 1 SCC 641, Hon'ble the Apex Court held that it is a settled law that subordinate legislation can be challenged on any of the grounds available for challenge against plenary legislation. This being the case, there is no rational distinction between the two types of legislation when it comes to this ground of challenge Under Article 14. The test of manifest arbitrariness, therefore, as laid down in the aforesaid judgments would apply to invalidate legislation as well as subordinate legislation Under Article 14. Manifest arbitrariness, therefore, must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary. We are, therefore, of the view that arbitrariness in the sense of manifest arbitrariness as pointed out by us above would apply to negate legislation as well Under Article 14.
(V) Khoday Distilleries Ltd. Vs State of Karnataka [(1996) 10 SCC 304]:
"13. It is next submitted before us that the amended Rules are arbitrary, unreasonable and cause undue hardship and, therefore, violate Article 14 of the Constitution. Although the protection of Article 19(1)
(g) may not be available to the appellants, the rules must, undoubtedly, satisfy the test of Article 14, which is a guarantee against arbitrary action. However, one must bear in mind that what is being challenged here under Article 14 is not executive action but delegated legislation. The tests of arbitrary action which apply to executive actions do not necessarily apply to delegated legislation. In order that delegated legislation can be struck down, such legislation must be manifestly arbitrary; a law which could not be reasonably expected to emanate from an authority delegated with the lawmaking power. In the case of Indian Express Newspapers (Bombay) Pvt. Ltd. and Ors. v. Union of India and Ors. [(1985) 1 SCC 641] this Court said that a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. A subordinate legislation may be questioned under Article 14 on the ground that it is unreasonable; "unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary". Drawing a comparison between the law in England and in India, the Court further observed that in England the Judges would say, "Parliament never intended the authority to make such Rules; they are unreasonable and ultra vires". In India, arbitrariness is not a separate ground since it will come within the (Downloaded on 28/06/2019 at 07:15:20 AM) (37 of 41) [CW-18587/2018] embargo of Article 14 of the Constitution. But subordinate legislation must be so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution."
75. An argument has been advanced by learned counsel for the petitioners that the deviation charges are in a way tax or penalty and the same is not permissible within the powers available to RERC under Section 181 of the Electricity Act, 2003. According to us, instead of being tax or a penalty, the deviation charge is a 'fine' imposed on a generator on its failure to adhere to a week ahead or a day ahead schedule of injection assured/guaranteed. In our view, the fine in the form of deviation charges on failure to meet with the schedule, is a necessary tool to keep the generator within the confines of its schedule of generation and the same is incidental rather quintessential to the regulatory mechanism. Hence, provision for deviation charges in Regulation 18 of the Regulations is within the expanse, scope and powers available to RERC under Section 181 of the Act of 2003.
76. Our aforesaid view flows from judgment of Hon'ble the Supreme Court in the case of Central Power Distribution Company [(2007) 8 SCC 197], wherein identical levy in the name of 'Unscheduled Inter-change Charges' (UI charges) has been held to be valid. We wish to make a gainful reference of para No.22.1 of the aforesaid judgment, which according to us, clinches the issue in its entirety:-
"The application of availability-based tariff and imposition of Unscheduled Interchange (UI) charges are essential part of the functions of the Central Commission under Section 79(1)(h) of the Electricity Act, 2003 which reads 'to specify Grid Code having regard to the grid standards', and sub-section (2) of (Downloaded on 28/06/2019 at 07:15:20 AM) (38 of 41) [CW-18587/2018] Section 28 read with Section 178(2)(g) dealing with the Central Commission's power to frame Grid Code. The maintenance of Grid discipline envisaged under the Grid Code is regulated by the mechanism of ABT and UI charges. There is no basis for the appellant to contend that unless something is a part of tariff the Central Commission cannot exercise powers and functions. ABT and UI charges are commercial mechanism to control the utilities in scheduling, dispatch and drawal and UI charges are tariff or charges payable for deviations. In the facts and circumstances mentioned above the legal position is clear and there is no ambiguity in respect of the jurisdiction of the Central Commission."
77. Petitioners' attempt, in our opinion, fails, that the above judgment in case of Central Power Distribution Company (supra) is distinguishable on facts and law. Learned counsel tried to draw a distinction by saying that the case before Hon'ble the Supreme Court was of thermal power, a traditional source of energy, whereas in the present cases, the generators before this Court are generating the electricity by wind energy, which is totally dependent upon the vagaries of weather.
78. We are of the firm view that, whatever may be the source of generating the power, the principle as far as power to levy charges or fine by whatever name called on account of deviation is concerned, they have been settled and shall remain unaltered. It is different matter altogether that it is for the Regulatory Commission to bear in mind the facts that in the case of generation by wind energy, the scheduling or forecasting may not be as accurate or flawless as in case of thermal power or other traditional mode of generation of electricity.
79. A perusal of the pleadings of the Association, more particularly para No.13 thereof, reveals that though the petitioner has stated that the members are not against the forecasting as (Downloaded on 28/06/2019 at 07:15:20 AM) (39 of 41) [CW-18587/2018] such and they are in favour of forecasting and scheduling, yet numerous arguments have been advanced finding fault with the forecasting regulations. It is thus clear that the petitioners have made a half-hearted challenge to the validity of the Regulations.
80. Argument of Mr. Bhansali that the respondents cannot levy deviation charges under Regulation 18 of the Regulations as the same would violate the provisions of the Regulations more particularly Regulation 5, is untenable. According to him, the impugned deviation charges interfere with the tariff fixed in the Regulations without there being any stipulation of levy of deviation charges in the tariff. This argument of Mr. Bhansali lacks merit as deviation charges are in the nature of fine on account of failure to meet the scheduled generation. As such the fine cannot be treated to be an amount deductible from the tariff or the generation charges. In our opinion, the deviation charge is independent and divorced of the tariff and as such the stipulation regarding amount payable contained in Regulation 5 does not get interfered or breached as a result of the deviation charges prescribed in the Regulation 18.
81. For what has been discussed above, we do not find anything offending or arbitrary in the impugned Regulations, making them vulnerable to Part III of the Constitution. Petitioners' challenge to the Regulations, thus, fails.
82. The petitioners have raised host of arguments, some of which touch upon the constitutional validity, while others seek to unravel their innate unreasonableness or impracticability. Notwithstanding the fact that we have upheld the validity of the impugned Regulations, we feel that certain grievances raised by (Downloaded on 28/06/2019 at 07:15:20 AM) (40 of 41) [CW-18587/2018] the petitioners, need to be appropriately addressed to, which we have noticed while hearing the arguments laying challenge to the vires of the Regulations of 2017.
83. We are cognizant of our constraints so far as the technical aspects are concerned. Needless to observe that with a view to appreciate the adversities allegedly faced and in a bid to fathom the financial disadvantages purportedly meted out by the wind power generators, one is supposed to know the nitty-gritties of generations; distribution; grid functions; and the technology, not only which is presently available, but also which is in offing. We thus refrain from embarking upon such unfamiliar terrain, and leave the technical aspects to be dealt with by the subject experts.
84. Learned Advocate General has assured us that RERC is a statutory body, comprising of experts of various subjects and is competent to deal with the grievances of the petitioners-power generators, besides possessing regulatory powers. Upon perusal of Regulations 23 to 26 of the Regulations, we find that they are wide enough to address the concerns raised by the petitioners.
85. We, therefore, relegate the petitioners to approach the RERC with their grievances, (including those which have been raised before us) for their efficacious redressal. The petitioners may file their representation/petition(s) ventilating their grievance(s) within a period of 15 days from today. In case such petition/review is filed, the RERC shall decide the same within a period of two months from the date of filing, after providing opportunity of hearing to all stake holders, including the petitioners. Until the petitioners' representation/review petitions are decided, the respondent RRVPNL shall remain restrained from (Downloaded on 28/06/2019 at 07:15:20 AM) (41 of 41) [CW-18587/2018] recovering the deviation charges from the petitioners and/or QCAs.
86. With these observations, all the three writ petitions are disposed of.
(DINESH MEHTA),J (SANGEET LODHA),J
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