Telangana High Court
M/S. Quality Care India Limited vs Southern Power Distribution Company Of ... on 24 September, 2025
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITIONS No. 13281, 13359 OF 2020, 34344, 34405, 35262,
35266, 35268, 35269, 35872, 35873, 36929, 36942, 36944, 37048,
37076, 37436 OF 2021
COMMON ORDER:
The above batch of Writ Petitions was filed impugning the notices of disconnection demanding the
differential wheeling charges, losses and interest thereon, on the energy consumed by the petitioners from private generating companies, purported to be basing on the tariff orders issued by the erstwhile A P Electricity Regulatory Commission (APERC) for the FY 2002-03 onwards, as illegal and arbitrary.
2. The case of petitioners is that wheeling agreements were entered into by various generating companies and the erstwhile APSEB/AP TRANSCO/DISCOMs (Licensees) under which the present issue arises, providing for wheeling charges in kind, to be paid by the generating companies to the licensees. These agreements were entered into prior to the establishment of the State Electricity Regulatory Commission (APERC) under the provisions of the Electricity Reforms Act, 1998. After APERC is constituted, it determined the wheeling charges to be paid by the generating companies in cash and also in kind for the losses applicable from FY 2002-2003 onwards in OP No. 510 of 2001. Questioning the order of APERC passed in OP No. 510 of 2001 dated 24.3.2002 in fixing wheeling charges for FY 2002- 2 03 as contrary to the agreements entered into between the generating companies and APSEB/AP TRANSCO/DISCOMs on the ground that APERC lacked jurisdiction to determine the wheeling charges contrary to the wheeling agreement, some of the generating companies and some consumers approached this Court by filing Civil Miscellaneous Appeal Nos. 1015 of 2002 and batch and also Writ Petitions. The Division Bench of this Court by order dated 18.04.2003 set aside the order of the APERC passed in OP No. 510 of 2001 dated 24.03.2002 by holding that APERC lacks jurisdiction to fix the wheeling charges under the provisions of the 1998 Act besides declaring that the rights of the parties under the concluded contracts cannot be altered and further the charges fixed were held to be irrational and exorbitant.
2.1. Aggrieved thereby, AP TRANSCO filed Civil Appeal No. 4569 of 2003 and batch before the Hon'ble Supreme Court. Pending Appeals, APERC also determined the wheeling charges for 2003 onwards, which orders were challenged by some of the generating companies and consumers by filing Appeals before APTEL which allowed the Appeals by setting aside the order of APERC based on the order passed by this Court as against which Civil Appeal No. 7029 of 2008 and batch were filed before the Hon'ble Supreme Court. By its judgment dated 29.11.2019, 3 the Hon'ble Supreme Court allowed all the Appeals and set aside the judgment of Division Bench of this Court and the order passed by APTEL, by restoring the order passed by APERC.
2.2. Pursuant to the judgment of the Hon'ble Supreme Court, impugned notices were issued to petitioners, demanding differential transmission/wheeling charges, loss and interest charges thereon from consumers. In that view of the matter, the present Writ Petitions came to be filed on the ground that there is no privity of contract between petitioners and respondents for charging the differential wheeling charges, transmission charges and losses from petitioners, who are consumers of the generators and also that the generators have agreements with respondent-licensees, therefore, any differential wheeling charges, transmission charges, losses are only to be collected from the generators and not from petitioners. 2.3. In the meanwhile, A.P. Reorganisation Act came into force whereby the composite State of Andhra Pradesh was divided into State of Telangana and State of Andhra Pradesh. The present impugned notices are issued pursuant to the judgment of the Hon'ble Supreme Court against the consumers instead of generators who had agreement with respondents. It is further stated that AP TRANSCO and DISCOMs in Andhra 4 Pradesh have taken a view that differential wheeling charges are to be recovered from generating companies and not from consumers. Therefore, petitioners contend that demand notices issued by Telangana DISCOM to the consumers were illegal. It is also contended that licensees in the State of Andhra Pradesh have recovered the differential wheeling charges, transmission losses from generating companies whereas Telangana DISCOMs are demanding the same from consumers and therefore contend that there is double recovery, both from the consumers and also generating companies. They contend that they are not liable to pay any amount/s towards differential wheeling charges, losses, etcetera to respondents. It is further contended that some writ petitions, on similar lines, were filed before the High Court of Andhra Pradesh and some of the parties moved the Hon'ble Supreme Court for transfer of all the cases which are pending on the file of the High Court of Andhra Pradesh to be transferred to Hon'ble High Court of Telangana so that there would be no conflicting views in the matter.
2.4. Learned Counsel have drawn the attention of the Hon'ble Court to the definition of open access under Section 2 (47) which reads that "open access means the non- discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or 5 system by any licensee or consumer or person engaged in generation in accordance with regulations specified by the appropriate Commission". Section 2 (74) "Transmit means conveyance of electricity by means of transmission lines and the expression "transmission" shall be construed accordingly". Section 2 (76) "wheeling means the operation whereby the distribution system and associated facilities of a transmission licensee or distribution licensee, as the case may be, are used by another person for the conveyance of electricity on payment of charges to be determined under Section 62". The Learned Counsels also placed reliance on Section 42 (2) of the Act which reads that "the State Commission shall introduce open access in such phases and subject to such conditions (including the cross subsidies and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in determining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies and other operational constraints".
2.5. It is also brought to the notice of this Court regarding relevant clauses of wheeling and purchase agreement between APSEB and power generators, more specifically Clauses 1.12, 2.5, 2.4, 7.1 and 8.1 which read as under. 6 1.12 - "net wheeled energy = wheeling energy less applicable wheeling charges".
2.5 - "wheeling schedule will be on the percentage based on percentage of delivered energy, to be wheeled to each of the scheduled consumers, only the net wheeled energy will be delivered to each of the consumer". 2.4 - "as a compensation for the provision of wheeling services, the board shall be entitled to deduct from delivered energy as a wheeling charge, in kind, which charges shall be at 2 %".
7.1 - "In calculating a scheduled consumer bill, the allocated energy to such scheduled consumer, reduced by the applicable wheeling charges and such allowed capacity shall be first deducted from the meter reading of energy and maximum demand for which the company shall bill such scheduled consumer and the balance of the metered energy and the maximum demand shall be deemed to be the power supplied by the AP TRANSCO to such scheduled consumer as per AP TRANSCO tariff conditions applicable from time to time".
8.1 - (iii) for making all payments on account of taxes, cesses, duties or levies, imposed by any Government or competent statutory authority on the land, equipment, material or works of the project or on the energy generated or consumed by the project or the company or on the income or assets of the company".
2.6. Learned Counsel further drawn the attention of the Court to relevant portion of the order passed by A.P. Electricity Regulatory Commission in O.P. No. 510 of 2001 dated 24.3.2002 with regard to Clause 8.27, 8.31 and 9.14 which read as under.
8.27 - "the wheeling charges should be calculated for wheeling the contracted energy namely the number of units. The project developers/generating companies availing services should pay realistic cost of such services".
8.31 - "the project developer who wishes to avail the wheeling services will contract with the DISCOM in whose area of supply the energy to be wheeled is consumed and pay the charges to such DISCOM. There will be 7 no arrangement between such project developers and AP TRANSCO or other DISCOM. It will be for DISCOMs and AP TRANSCO to have arrangement between themselves in regard to the use of the system. There will therefore be no apportionment of wheeling charges as such between AP TRANSCO and DISCOM as suggested by the applicants". 9.14 - "the wheeling charges are applicable uniformly to all project developers, the network, balancing, ancillary charges will be recovered in cash and losses in kind".
2.7. Learned Counsel also contend that a conjoint reading of all these clauses with the definitions as envisaged in the Act demonstrate that wheeling services were availed by the power generators and not by petitioners who are consumers and the liability, if any, to pay the wheeling and transmission charges is of the generators/project developers and not petitioners who are admittedly consumers. It is further contended that as there is no privity of contract between petitioners and respondents and as there is no contractual relationship with Respondents for the purpose of wheeling from generators, respondents were totally misguided in issuing the impugned demand notices. It is further submitted that demands raised are time barred, therefore, respondents cannot recover the amounts demanded.
3. Per contra, learned Standing Counsel for TGSPDCL Sri N. Sreedhar Reddy contends that prior to Electricity Regulatory Commission coming into existence, the erstwhile 8 APSEB/AP TRANSCO entered into Memorandum of Understanding (MOU)/Power Purchase and Wheeling Agreement (PPWA) with the captive generators and private generators to sell power to the captive/scheduled consumers and in return, wheeling losses in kind (percentage) were adjusted in the monthly HT C.C. bills of the scheduled consumers as per the provisions of MOU/PPWA entered into between the generators and APSEB/AP TRANSCO/DISCOMs from the energy wheeled. There was no levy of wheeling/ transmission charges in cash during the said period prior to 2002-2003. The State Electricity Regulatory Commission was formed in view of A.P.Electricity Reforms Act, 1998. Thereafter, AP TRANSCO/DISCOMs have filed Application in O.P.No. 510 of 2001 for levy of wheeling losses in kind and wheeling and transmission charges in cash. The Electricity Regulatory Commission, on the Application of DISCOMs vide O.P.No. 510 of 2001 allowed the same by order dated 24.03.2002 permitting levy of wheeling charges in kind and also wheeling/transmission charges in cash in the tariff order from the FY 2002-03 onwards.
3.1. It is submitted, generators having entered into agreement with AP TRANSCO/DISCOMs should submit the quantum of energy allocated to each scheduled consumer of the generator/shareholder of APGPCL for each month to the 9 DISCOMs as per the jurisdiction/location. The charges in kind were adjusted towards wheeling losses from the delivered energy and the consumers were issued with C.C. bills for the remaining consumption as per the order of APERC. Said methodology was followed from FY 2002-03 onwards till date. The order in OP No. 510 of 2001 dated 24.03.2002 was set aside by this Court in the batch of Civil Miscellaneous Appeals filed. Thereafter, similar order of APERC from FY 2003 onwards was questioned before APTEL which by its Order dated 08.05.2008 set aside the order of APERC on the lines of the judgment rendered by this Court against which S.L.Ps. were filed vide Civil Appeal Nos. 4569 of 2003 and batch and Civil Appeal Nos. 7029-7062 of 2008 and batch. On 29.11.2019, the Hon'ble Supreme Court allowed the said Special Leave Petitions by setting aside the order of this Court and the order of APTEL by holding that the State Electricity Regulatory Commission is competent to determine the wheeling charges, transmission charges and also grid support charges. Accordingly, Respondents issued demand notices requesting payment of differential wheeling transmission charges from all the captive scheduled consumers and third party generators.
3.2. It is further contended by the learned Standing Counsel that difference of wheeling/transmission charges, 10 wheeling losses, transmission losses in kind was arrived/calculated as furnished below.
a. The shortfall/excess wheeling losses and transmission losses in kind (units) are arrived at considering the difference of wheeling losses and transmission losses in kind as per ERC order and as per MOU/PPWA. b. The shortfall/excess wheeling losses amount is arrived by multiplying the shortfall/excess units with energy charges rate per unit in the respective month and year tariff orders.
c. The applicable wheeling charges and transmission charges in cash are arrived by multiplying the gross energy allocated by the generators to the HT scheduled consumers with wheeling charges and transmission charges rate per unit/KVA/KW approved by ERC. Same is illustrated as under.
Illustration
A Gross units allocated (in units) 100000
B % of Wheeling Losses in kind as per MOU/PPWA 15 %
C % of Wheeling Losses in kind as per Tariff Order 28.40 %
D Wheeling Losses in kind as per MOU/PPWA 15000
(100000*15/100) (a*b) (in units)
E Wheeling Losses in kind to be collected as per 28400
Tariff order (as per Supreme Court Order
(100000*28.4/100) (a*c) (in units)
F Shortfall Wheeling losses in kind collected 13400
(28400-15000) (e-d) (in units)
G The difference amount to be collected towards 49714
Wheeling losses between MOU/PPWA rates and
tariff order rates at the applicable energy charges rate per unit (13400*3.71 per unit) (f*3.71) (in Rs.) H Wheeling Charges in cash @ Rs.0.50/per unit of 50000 Gross energy wheeled (100000 units * 0.50/KWH) (a*0.50) (in Rs.) I Total Difference of Wheeling Charges to be 99714 collected (g+h) (in Rs.) 11 3.3. It is further contended that after Electricity Act, 2003 came into force, the licensing requirement for generation was removed and introduced Open Access under Section 42. All the permissions granted under the repealed Act of 1910 and 1948 are deemed to be considered as deemed approved under Section 42 of the said Act and henceforth, the wheeling services are provided by utility under Section 42. Learned Standing Counsel further submits that Section 42 (4) mandates that any consumer availing open access shall pay additional surcharge in addition to the wheeling charges. These charges are intended to compensate the distribution licensee for availing the wheeling service. It is stated that scheduled consumers are integral part of the wheeling agreements entered into by the generators with the DISCOMs and the generators always included an annexed list of scheduled consumers thereby making the scheduled consumers an integral part of the agreement and liable for the associated charges. Therefore, there was no illegality or irregularity in issuing the demand notices.
3.4. It is argued that wheeling losses in kind even prior to E.R.C. passing the Award were consistently adjusted in the electricity bills of consumers based on wheeling schedules submitted by the generators. Therefore, the operational practice reflects consumers' direct involvement in the wheeling 12 arrangement. It is further important to note that APERC in its order dated 24.3.2002 in O.P. No. 510 of 2001 at Clause 8.19 clearly stated that there is no need for tripartite or multipartite agreements involving AP TRANSCO/DISCOMs and each wheeled consumer. It further stated that a single agreement between the generator and DISCOM is sufficient which reflects the transmission and distribution systems, hence the contention of the petitioners that there is no privity of contract cannot stand and falls flat. It is further contended that where APGPCL is the generator of some of the consumers/writ petitioners, the privity of contract cannot be a ground for the reason that all the scheduled consumers of APGPCL for which it has supplied the power are its shareholders and therefore the agreement by the company is binding on its shareholders. Therefore, the contention that there is no privity of contract even otherwise cannot stand. It is stated that APERC determined the tariff by including wheeling/transmission charges, losses, etcetera. These charges are to be recovered by the DISCOMs from the consumers located in their jurisdiction.
3.5. It is further stated that in Trimex International FZE Limited v. Vedanta Alluminium Limited 1 and Brogden 1 (2010) 3 SCC 1 13 v. Metropolitan Railway Co. 2, the Hon'ble Supreme Court held that a binding contract may arise from the conduct of the parties. In the case on hand, petitioners/consumers have consistently allowed Respondents/DISCOMs to adjust the wheeled energy in their electricity bills in accordance with the methodology prescribed in the regulatory framework. This conduct amounts to implied acceptance and performance of contractual obligations.
3.6. In ONGC Limited v. Discovery Enterprises Pvt. Limited 3 and Cox & Kings Ltd v. SAP India Pvt Limited 4, the Hon'ble Supreme Court reaffirmed that even non-signatories may be bound by the contractual terms if they derive benefit or participate in the performance of the contract. In Motilal Padampat Sugar Mills Co. Ltd v. State of UP 5, a party who induces reliance through its conduct cannot subsequently deny the legal consequences of such conduct.
3.7. As regards the contention of petitioners that the demands raised by DISCOM are time barred, it is stated that the orders of APERC in OP No. 510 of 2001 dated 24.03.2002 was subject matter of Special Leave Petitions before the Hon'ble Supreme Court and only on 29.11.2019, the Hon'ble Apex Court 2 (1877) 2 App Cas 666 3 (2022) 9 SCC 596 4 2023 INSC 1051 5 (1979) 2 SCC 409 14 affirmed the order of Electricity Regulatory Commission and notices were issued to consumers and generators immediately thereafter. Therefore, said notices can never be said to be time barred under Section 56 (2) of the 2003 Act. The contention of petitioners that liability cannot be fastened on both scheduled consumers and generator simultaneously is not correct. Notices were issued to petitioners which are impugned in the present Writ Petitions and in view of challenge of notices on the ground of absence of privity of contract, as a precautionary measure and to safeguard DISCOMs' revenue, notices were issued to the generators which are also disputed.
3.8. Learned Standing Counsel while drawing attention of the Court to Section 42 (2) and (4) of the Act and the order of APERC, contends that there is no illegality or irregularity in the demand notices issued to consumers. He filed the following flowchart showing the calculation of differential wheeling charges apart from a diagram, as below, was also filed showing the charges that were being collected from the consumers in the Current Consumption Charges.
1516 17 3.9. It is contended that there is an agreement between generators and its scheduled consumers/petitioners for supply of energy wherein the energy generated would be transmitted to its scheduled consumers as per the said agreement. Said agreement is not made public and the said agreement has not seen the light of the day. If the said agreement is produced before this Court, it would come to light that consumers are liable to pay wheeling charges and in turn the differential wheeling charges as per the order of APERC also. By not making the said agreement public and not disclosing the contents of the agreement, the generators and petitioners are playing hide and seek keeping the respondents and this Court in dark. It is contended that petitioners have not come to the Court with clean hands and not disclosed the factual aspects and the contents of the agreement inter se the generators and the petitioners. On this ground also, the Writ Petitions are liable to be dismissed.
3.10. It is further contended that several questions of fact and technical issues regarding calculations have been raised by petitioners in the lis and this Court under Article 226 of Constitution of India cannot go into the said disputed questions of fact and the technical issues to decide the above writ petitions. Petitioners can always approach the Electricity 18 Regulatory Commission seeking clarity on the order passed by it. Therefore, this Court cannot be asked to delve into the said factual issues and technical issues which can be decided by the Electricity Regulatory Commission. In the absence of making the agreements available for perusal of this Court, it is not possible for the Court to delve into the said issues. Therefore, there is no illegality in fastening the liability on the consumers by issuing the impugned proceedings. No grounds are made out for interference of this Court.
4. Petitioners replied to the arguments of learned Standing Counsel stating that the illustration of C.C. bill filed along with the counter affidavit would only show that net energy has been supplied to consumers after deducting wheeling loss percentage, therefore, the consumers have never undertaken to compensate loss of energy due to wheeling and therefore, it was the generators who were bearing the wheeling losses in kind earlier and at this juncture who are bearing the difference of wheeling losses in kind and cash after the order of E.R.C.
5. This Court considered all the submission made by the respective Counsel. The main ground urged by learned counsel for petitioners regarding privity of contract, APERC in the order passed in OP No. 510 of 2001 had categorically held that there is no need for tripartite or multipartite agreements 19 involving AP TRANSCO/DISCOMs and each wheeled consumer. More over, the judgments relied on by respondent in Trimex International FZE Ltd, wherein the Hon'ble Supreme Court held that acceptance of contractual terms may be either express or implied and binding contract may arise from the conduct of the parties. In ONGC Ltd 2022 (9) SCC 596, the Hon'ble Apex Court reaffirmed that even non-signatories may be bound by contractual terms if they have derived benefit or participate in performance of the contract. In view of the above, petitioners' contention that there is no privity of contract between them and the DISCOM, hence the demand notices shall be set aside, is rejected. The contention that demand notices are time-barred under Section 56(2) of the Act has no legs to stand as the order of APERC has been upheld by the Hon'ble Supreme Court only on 29.11.2019 and the demand notices were issued in 2000 and 2001. In any event, the Hon'ble Supreme Court in Rahmatullah's case interpreted Section 56(2) of the Act. Hence this Court holds that demand notices are not barred by limitation.
6. Further, petitioners have not come to the Court with clean hands as they have suppressed the agreement between them and the generators which has not seen the light of the day. Even when this Court asked learned counsel for 20 petitioners to produce the copy of the agreement, they have not done so far. Petitioners have not filed any rejoinders rebutting the contents of counter affidavit that petitioners were being billed the wheeling charges all these years, hence the difference of the wheeling charges as adjudicated by the APERC shall also be paid by petitioners only.
7. Petitioners have raised several questions of fact which cannot be adjudicated by this Court under Article 226 of the Constitution of India. For all the above reasons, the Writ Petitions fail and are accordingly, dismissed. No costs.
8. Consequently, the miscellaneous Applications, if any shall stand closed.
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NAGESH BHEEMAPAKA, J 24th September 2025 ksld 21