Section 3 in The Orissa Electricity Reform (Transfer of Assets, Liabilities, Proceedings and Personnel of Gridco to Distribution Companies) Rules, 1998
3. Classification and transfer of Undertakings.
(1)The existing business and undertakings of Gridco shall stand classified, namely as :(a)Central Zone Distribution Undertaking;(b)North Eastern Zone Distribution Undertaking;(c)Western Zone Distribution Undertaking;(d)Southern Zone Distribution Undertaking; and(e)Transmission Undertaking and Residuary Undertakings.(2)The Gridco and each of the Distcos have agreed that the distribution Business and Undertaking of the Central Zone, North Eastern Zone, Western Zone and Southern Zone, taking into consideration the relatedness, usability, proximity and contiguity to the functions to be performed, suitability, place and nature of work and the viability of the distribution zones, shall comprise of the Specified Assets, Specified Liabilities, Specified Proceedings and Specified Personnel as set out in Schedules A, B, C and D respectively and that the value of the assets and extent of the liabilities transferred, the shares to be issued to Gridco as consideration for the transfer and other financial details contained in the respective schedules have been worked out based on the professional advice received and verified by them.The Gridco and each of the Distcos have further agreed that any difference which may arise in regard to the above shall be mutually settled between Gridco and Distcos with no liability to the State Government.(3)With effect from the appointed date the Distribution Undertakings of Gridco classified under Sub-rule (1) and comprising the Specified Assets, Specified Liabilities, Specified Proceedings and Specified Personnel as agreed to between Gridco and each of the Distcos and set out in the Schedules A, B, C and D shall stand transferred to and vest in Cesco, Nesco, Wesco and Southco respectively without any further act or things to be done by the State Government, Gridco, any Distco, the Personnel, debtors or creditors or any other person, subject, however, to the terms and conditions contained in these rules.(4)The transmission and residuary undertakings with all Assets, Liabilities, Proceedings and Personnel other than those specified under Sub-rules (2) and (3) as forming part of any of the Distribution Undertakings, shall continue to remain with and belong to Gridco.(5)On the transfer and vesting of the Distribution Undertakings and except as otherwise provided in these rules the relevant Distco shall be responsible for all, or the relevant part of any, contracts, tenders, rights, deeds, schemes, bonds, agreements and other instruments of whatever nature relating to the Distribution Undertakings, which are subsisting or having effect on the Appointed Date, in the same manner as Gridco was liable immediately before the Appointed Date and the same shall be in full force and effect against or in favour of the relevant Distco and may be enforced as fully and effectively as if instead of Gridco, the relevant Distco had been a party thereto :Provided however, If any of the Specified Assets transferred to a Distco are subject to any security document or arrangement in favour of any third party, such assets shall stand transferred to the relevant Distcos subject to such security but Gridco shall enter into an agreement with the concerned Distcos for payment and discharge of such liability by Gridco to the third parties.(6)All licenses and consents held by Gridco relating to the Distribution Undertakings shall be in full force and effect as if instead of Gridco, such licenses and consents had been issued to each of the Distcos and as from the Appointed Date each Distco shall be responsible for the collection of electricity duty in place of Gridco in its-Area of Supply.(7)The State Government, in accordance with the Agreement dated 10 July 1996 (hereinafter called the "Orissa Agreement") with the International Bank for Reconstruction and Development (hereinafter called the "IBRD") and pending the transfer of the Distribution Business from Gridco to the Distcos, had for the purposes of strengthening the Distribution System lent to Gridco part of the proceeds of the loan from the IBRD through subsidiary loan agreements entered into between the State Government and Gridco. The assets and interest in assets related to the Distribution Business and forming part of the Specified Assets of each of the Distcos, the acquisition of which was funded from the loan from IBRD shall stand transferred from Gridco to the relevant Distco together with the corresponding liabilities which shall form part of the Specified Liabilities in terms of these rules subject to the condition that :(i)Within the time prescribed for the purpose by the State Government the relevant Distco shall execute a subsidiary loan agreement with the State Government and a project implementation agreement on terms and conditions approved by IBRD, inter alia, providing for schedule of repayment of all such Specified Liabilities on account of funds provided from the loan from IBRD, the interest, charges and other outgoings thereon, the security and safeguards to the satisfaction of the State Government to protect the interest of IBRD and the State Government and other applicable terms and conditions, whereupon the obligation to make payment of such Specified Liabilities shall stand transferred from Gridco to the Distcos; and(ii)In the event the subsidiary loan agreement is not entered into within the time specified by the State Government the relevant Distco shall forthwith pay to Gridco the amounts due to Gridco with interest, charges and outgoings on the funds from IBRD used for the acquisition of the Specified Assets transferred to the relevant Distco to enable repayment by Gridco to the State Government the relevant amounts in accordance with the subsidiary loan agreement signed between Gridco and the State Government.
