Gujarat High Court
Gujarat Electricity Board vs Reliance Industries Ltd on 11 March, 2022
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1610 of 2004
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of India
or any order made thereunder ?
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GUJARAT ELECTRICITY BOARD
Versus
RELIANCE INDUSTRIES LTD & 1 other(s)
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Appearance:
MR SN SHELAT SENIOR COUNSEL WITH MS LILU K BHAYA(1705) for the
Appellant(s) No. 1
MR MIHIR JOSHI SENIOR COUNSEL FOR NANAVATI ASSOCIATES(1375) for the
Defendant(s) No. 1
GOVERNMENT PLEADER for the Defendant(s) No. 2
MR SIRAJ R GORI(2298) for the Defendant(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 11/03/2022
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 This appeal under Section 27 of the Electricity Regulatory Page 1 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 Commission Act, 1998 (for short, "the Act, 1998") is at the instance of the Gujarat Electricity Board being the original respondent before the Gujarat Electricity Regulatory Commission, Ahmedabad and is directed against the common order passed by the Commission dated 6 th September 2002 declaring the levy and the collection of charges @ 3 times of demand charges on excess drawal of power under clause 15 of the Commercial Circular No.687 dated 21 st December 1998 and the revised Commercial Circular No.687-A dated 26th October 1999 resply as without jurisdiction. The Commission also directed the appellant - GEB to refund the amount recovered from the respondent herein under the two circulars referred to above for the period between 1998 and October 1999 with interest @ 6% per annum.
2 The facts giving rise to this appeal may be summarised as under:
3 The appellant - Gujarat Electricity Board came to be constituted by the State Government under Section 5 of the Electricity (Supply) Act, 1948 (for short, "the Supply Act"). It is a body corporate having perpetual succession and a common seal. The appellant - Board is engaged in generating, distributing and supplying electrical energy to the consumers and licensees.
4 The respondent No.1 - M/s. Reliance Industries Limited is a company registered under the Companies Act, 1956 (for short, "the Act, 1956") and is engaged in the business of manufacturing petrochemicals at its plant situated at village : Mora on the Surat Hazira Road.
5 It is the case of the appellant - Board that it has been supplying electrical energy to the plant of the respondent No.1. As there was a huge demand for electrical power in Gujarat and other parts of the Page 2 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 country and the Board was not in a position to cope with such demand, the Government of Gujarat formulated a power policy levying the private participation in the installation of generator sets. Under the said policy, the industrial units were to be permitted to set up their own Captive Power Plant (CPP) to meet with their requirements.
6 In pursuance of the power policy announced by the Government of Gujarat in December 1995, the Government of Gujarat, Energy and Petrochemicals Department, by its resolution dated 9 th November 1998 declared the policy for supply of surplus electrical power to a group of companies. The said resolution dealt with the contract demand. It provides that the industries on commissioning of the CPP would be allowed to reduce their original contract demand (i.e. if the contract demand is of 1000 KVA, then it could be reduced to any level upto 250 KVA depending upon the need of the consumers) when they intend to have parallel operation with the Grid.
7 The demand of power from the State Grid by the industrial unit was subjected to the applicable tariff of the licensee.
8 In view of the State Government Resolution referred to above laying down the power policy, the appellant - Board, vide its resolution No.10374 provides that any excess drawal of power from the contract demand would be charged at the rate which would be 3 times of the demand charges of applicable HT tariff per KWA and the energy charges would be charged at the applicable HT tariff.
9 On the strength of the Captive Power Policy, which came into force w.e.f. 9th November 1998, the appellant - Board issued Commercial Circular No.687 dated 21st December 1998. The clause 15 therein Page 3 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 provided that any excess drawal of power from the contract demand would be charged at the rate which would be 3 times of the demand charges as per the applicable HT tariff per KVA. According to appellant - Board, any industry, if found to be exceeding the contracted load, would fall within the ambit of the "malpractice" and would be liable for disconnection of power supply and liable of penal assessment as per the conditions stipulated therein.
10 It is the case of the appellant - Board that the respondent No.1 is a HT consumer having Captive Power Plant. It had drawn power in excess of the contract demand at the relevant points of time. The bills in that regard are reproduced in tabular form as under:
Sr. Month Contract Actual demand Excess demand
No. demand registered during
the month
1 November, 1998 3000 8400 5400
2 December 1998 5000 6400 1400
3 January 1999 5000 15200 10200
4 February 1999 5000 20800 15800
5 March 1999 5000 5600 600
6 April 1999 5000 18400 13400
7 May 1999 5000 16000 11000
8 January 2001 (P. 38) 15000 26800 11800
9 September 2001 (P. 15000 31200 16200
40)
11 In view of the aforesaid, the appellant - Board issued
supplementary bills to the respondent No.1 for the month of January and September 2001 respectively. The supplementary bill for the month of January 2001 was to the tune of Rs.44,13,468/- and for the month of September 2001, it was for Rs.69,54,055/-.
Page 4 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 12 The respondent No.1, upon receipt of such bills, raised an
objection that the appellant - Board stated that those were issued in violation of the tariff dated 22nd October 1996 and the order dated 10 th October 2000 issued by the Regulatory Commission. The respondent No.1 brought to the notice of the Board that according to the tariff of 1996, it was required to pay Rs.180 per KVA per month for billing demand upto contract demand and Rs.500 per KVA per month for the billing demand in excess of the contract demand beyond 10% of the contract demand or 100 KVA, whichever would be less.
13 As the appellant - Board overruling the objection raised by the respondent No.1, the respondent No.1 thought fit to approach the Commission by way of petition No.70 of 2002 challenging the legality and validity of the aforesaid appeal.
14 The Commission took the view that the Board could not have issued two circulars referred to above levying the aforesaid charges for consumption of power in exercise of the contract demand. In other words, the supplementary bills could not have been issued against the tariff prescribed by the Commission for the GEB under the order 10 th October 2000.
15 Being dissatisfied with the order passed by the Commission, the Board is here before this Court with the present appeal.
SUBMISSIONS ON BEHALF OF THE APPELLANT - BOARD:
16 Mr. S. N. Shelat, the learned Senior Counsel assisted by Ms. Bhaya, the learned counsel appearing for the appellant - Board vehemently submitted that the impugned order passed by the Page 5 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 Commission could be termed as an erroneous in law. Mr. Shelat would submit that the Board has the jurisdiction to frame and revise the tariff till the Commission is clothed with the powers to determine the tariff under Section 22(1) read with Section 29(1)(2) of the Act.
17 Mr. Shelat would submit that the Commission would be empowered to determine the terms and conditions for fixation of tariff only after the Commission was to frame the regulations. The framing of the regulations is a condition precedent with the determination of the tariff and the same is statutorily mandatory. According to Mr. Shelat, the term "establishment" only means bringing into existence. In other words, the exercise of power after establishment can be undertaken only after the Commission is constituted and becomes functional. Mr. Shelat would submit that the provisions of the Electricity Regulatory Commission Act, 1998 do not repeal the Electricity Supply Act, 1948. The then Gujarat Electricity Board was constituted under Section 5 of the said Act by the State of Gujarat and was engaged in generating, distributing and supplying electricity to the consumer and licensee. The Board is not deprived of its powers to frame tariff. According to Mr. Shelat, it was within the competence of the GEB to issue the commercial circular for enhancement of penalty for those who are drawing more power than the one contracted.
18 The learned Senior Counsel would submit that the enhancement of penalty does not amount to fixation of tariff. The revised bill issued in favour of the respondent No.1 is under Section 24 of the Indian Electricity Act. The said Act has not been repealed. The learned Senior Counsel would submit that the Commission has been established with the object of carrying out its functions. Till it is in a position to carry out its functions as required under the Act, the Board is not deprived of its Page 6 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 power to frame the tariff. In other words, the establishment of the Commission does not denude the power of the Board to frame the regulations.
19 It was pointed out to us that the respondent No.1 is a High Tension consumer, and in such circumstances, it invoked the jurisdiction under Section 22(1) of the Act. It is submitted that Section 22(1) of the Act does not confer upon the Commission the power to determine the dispute between the consumer and GEB. The Commission is vested with the power to resolve the dispute with the licensee and utility under Section 22(2)(f) of the Act. The case on hand is not one of a dispute between the licensee and utility.
20 In the last, the learned Senior Counsel submitted that the impugned commercial circular does not frame any tariff, but all it has done is to ensure the penalty for excess consumption of energy and the dispute is not a dispute about the tariff. The Board has not framed any tariff by commercial circular.
21 Mr. Shelat, in support of his aforesaid submissions, has placed strong reliance on the decision of the Supreme Court in the case of Maharashtra State Electricity Distribution Company Ltd vs. Union of India and others [Civil Appeal No.4304 of 2007 decided on 28th February 2020]. This decision has been relied upon to fortify the submission that the Gujarat Electricity Board could be said to have the requisite jurisdiction to revise the tariff till such time as the Commission was constituted and the purposes of the 1998 Act could be achieved through it. In other words, till the time the regulatory Commission was not constituted by the State of Gujarat, the power to determine the tariff remained with the Board under the Electricity (Supply) Act, 1948, as it Page 7 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 was not repealed by the Electricity Regulatory Commission Act, 1998.
22 In such circumstances referred to above, Mr. Shelat prays that there being merit in his appeal, the same may be allowed and the impugned order passed by the Commission may be quashed and set aside.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO.1:
23 Mr. Mihir Joshi, the learned Senior Counsel appearing for the respondent No.1, on the other hand, has vehemently opposed the present appeal submitting that no error, not to speak of any error of law could be said to have been committed by the Commission in passing the impugned order.
24 Mr. Joshi raised a preliminary objection as regards the very maintainability of the present appeal in view of the fact that the impugned order dated 6th September 2002 passed by the Commission is a common order passed by it in two petitions i.e. Petition No.70 of 2002 and Petition No.71 of 2002 resply. In both the petitions, common issues were raised and decided i.e. (1) validity of the circular No.687 and (2) jurisdiction of the GERC to adjudicate the said petitions. Mr. Joshi pointed out that only one appeal has been preferred against the common order dated 6th September 2002 insofar as it concerns the petition No.70 of 2002. He would submit that the findings of the GERC as recorded in with respect to the petition No.71 of 2002 are concerned, these could be said to have attained finality as the Board has thought fit not to file any appeal, and in such circumstances, the findings recorded by the Commission would operate as res judicata so far as the present appeal is concerned. In this regard, Mr. Joshi seeks to rely on the decisions of the Page 8 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 Supreme Court in the case of Lonankutty vs. Thomman and another reported in (1976) 3 SCC 528 and Premier Tyres Limited vs. Kerala State Road Transport Corporation reported in 1993 Supp (2) SCC 146.
25 Mr. Joshi further submitted that the GERC was duly constituted on 12th November 1998 under Section 17 of the Electricity Regulatory Commission Act, 1998. By virtue of Section 22 of the Act, the GERC is conferred with the power to determine the tariff for electricity, wholesale, bulk, grid or retail. Tariff would include the charges levied either for the supply of electricity or contract demand and would also include the levy for excess drawal beyond the contract demand and any levy of charges in the nature of tariff can be determined by the GERC only and the GEB had no authority to issue any circulars levying or revising any charges including the parallel operation charges, which are essentially in the nature of tariff. The GEB, therefore, had no authority to issue the impugned commercial circular No.687 dated 21 st December 1998 imposing higher rates of penalty charges for the excess drawal of power after the constitution of the GERC on 12 th November 1998 inasmuch as by virtue of Section 22 of the ERC Act, the GERC is enjoined with all the powers for determining the tariff for electricity. In this regard, Mr. Joshi seeks to rely on the decisions of the Supreme Court in the case of BSES Limited vs. Tata Power Co. Ltd and others reported in (2004) 1 SCC 195 and Oswal Woollen Mills Ltd vs. Punjab State Electricity Board and another reported in (2006) 13 SCC 719.
26 Mr. Joshi would submit that the GERC had the jurisdiction to entertain and adjudicate the petition preferred by the Reliance Industries Ltd, inasmuch as (i) under Section 22(2)(e) of the ERC Act, the GERC is empowered to regulate the working of a Licensee i.e. GEB; and (ii) a captive power plant is a generator of electricity and therefore, a utility Page 9 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 under Section 2(1) covered under Section 22(1)(f) of the 1948 Act. In any case, the issue of excess recovery of charges by way of the impugned circular is general in nature and therefore, also, the GERC was empowered to adjudicate the petition of the Reliance Industries Ltd under Section 22(2)(e) of the Act.
27 Mr. Joshi would submit that the GEB has an obligation to supply electricity and levy tariff as prescribed by the GERC. The GERC is further empowered to issue directions to the GEB to regulate its functioning and ensure that the tariffs levied by the GEB are as prescribed. It is submitted that the petition filed by the Reliance Industries Ltd before the GERC was to enforce the tariff so fixed by the GERC and hence, maintainable. He seeks to rely upon two decisions of the Supreme Court (i) Maharashtra Electricity Commission vs. Reliance Energy Ltd and others reported in (2007) 8 SCC 381 and (ii) Brihanmumbai Electricity Supply and Transport Undertaking vs. Maharashtra Electricity Regulatory Commission and others reported in (2015) 2 SCC 43.
28 In such circumstances referred to above, Mr. Joshi prays that there being no merit in this appeal, the same may be dismissed.
ANALYSIS:
29 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the Commission committed any error in passing the impugned order.
30 We now proceed to discuss the issues on merits. The Electricity Regulatory Commissions Act, 1998 (for short, "The Act, 1998) has been enacted to provide for the establishment of a Central Electricity Page 10 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 Regulatory Commission and the State Electricity Regulatory Commissions, rationalization of electricity tariff, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and for matter connected therewith or incidental thereto.
31 The term "licensee" has been defined under Section 2(f). It reads thus:
"2(f) "Licensee" means a person licensed under Part II of the Indian Electricity Act, 1910 (9 of 1910) to supply energy or a person who has obtained sanction under Section 28 of that Act to engage in the business of supplying energy (but does not include the Board or a Generating Company);"
32 The term "State Commission" has been defined under Section 2(j). It reads thus:
"2(j) "State Commission" means the State Electricity Regulatory Commission established under sub-section (1) of Section 17;"
33 The Term "transmission utility" has been defined under Section 2(k) of the Act. It reads thus:
"2(k) "transmission utility" means any generating company, Board, licensee or other person engaged in the transmission of energy;"
34 The term "utility" has been defined under Section 2(l) of the Act. It reads thus:
"2(l) "utility" means any person or entity engaged in the generation, transmission, sale, distribution or supply, as the case may, of energy;"
35 Chapter - V is with respect to the powers and functions of the State Commission. Section 22(2)(n) reads thus:
Page 11 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
"22. Functions and State Commission.
...
(2) Subject to the provisions of Chapter III and without prejudice to the provisions of sub-section (1), the State Government may, by notification, in the Official Gazette, confer any of the following functions upon the state Commission, namely:-
...
(n) to adjudicate upon the disputes and differences between the licensees and utilities and to refer the matter for arbitration;"
36 After the enactment of the Electricity Regulatory Commissions Act, 1998 ["ERC Act"] which came into force on 25 th April 1998 and the constitution of the State Commission vide Notification dated 12 th November 1998, the Gujarat Electricity Board ["GEB"] could be said to have been denuded of its power to fix the tariff conferred under Section 49 of the Electricity Supply Act, 1948 ["1998 Act"], in view of Section 29 of the ERC Act read with Section 22 thereof.
37 Mr. Joshi, the learned Senior Counsel appearing for the respondents has placed strong reliance on the decision of the Supreme Court in the case of BSES Ltd. vs. Tata Power Co. Ltd. and others reported in (2004) 1 SCC 195 (paras 16 to 19) and Maharashtra State Electricity Distribution Co. Ltd. vs. Union of Indian and others reported in AIR 2020 SC 1245 (para 24) which quotes with approval the decision in the case of Binani Zinc Limited vs. Kerala State Electricity Board reported in (2009) 11 SCC 244 to fortify his submission that after the constitution of the Regulatory Commission, the same will be the sole authority to determine the tariff. Moreover, Section 52 of the ERC ACT gives an overriding effect to the provisions of the said Act, notwithstanding anything inconsistent therewith contained in any other Act. Since the impugned circulars being the commercial circular No.687 dated 21st December 1998 and its corrigendum dated 26th October 1999 have been issued by the GEB after the constitution of the State Page 12 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 Commission on 20th November 1998, those are without jurisdiction and authority of law and the said circulars along with the supplementary bills issued pursuant thereof deserve to be quashed and set aside.
38 Before we proceed further, we must quote the relevant observations made by the Supreme Court in the above referred decisions.
39 In BSES Ltd. (supra), the Supreme Court observed in paras 16 to 19 as under:
"16. The word "tariff" has not been defined in the Act. "Tariff' is a cartel of commerce and normal it is a book of rates. It will mean a schedule of standard prices or charges provided to the category or categories of customers specified in the tariff. Sub-section (1) of Section 22 clearly lays down that the State Commission shall determine the tariff for electricity (wholesale, bulk, grid or retail) and also for use of transmission facilities. It has also the power to regulate power purchase of the distribution utilities including the price at which the power shall be procured from the generating companies for transmission, sale, distribution and supply in the State. 'Utility' has been defined in Section 2(1) of the Act and it means any person or entity engaged in the generation, transmission, sale, distribution or supply, as the case may be, of energy. Section 29 lays down that the tariff for intra-State transmission of electricity and tariff for supply of electricity, wholesale, bulk or retail in a State shall be subject to the provisions of the Act and the tariff shall be determined by the State Commission. Sub-section (2) of Section 29 shows that terms and conditions for fixation of tariff shall be determined by Regulations and while doing so, the Commission shall be guided by the factors enumerated in Clauses (a) to (g) thereof. The Regulations referred to earlier show that generating companies and utilities have to first approach the Commission for approval of their tariff whether for generation, transmission, distribution or supply and also for terms and conditions of supply. They can charge from their customers only such tariff which has been approved by the Commission. Charging of a tariff which has not been approved by the Commission is an offence which is punishable under Section 45 of the Act. The provisions of the Act and Regulations show that the Commission has the exclusive power to determine the tariff. The tariff approved by the Commission is final and binding and it is not permissible for the licensee, utility or any one else to charge a different tariff.Page 13 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022
C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
17. There is a sound logic for conferment of such a power on the Electricity Regulatory Commission. Hitherto the supply of electricity was being made by only one body, namely, State Electricity Boards which being an instrumentality of the State and functioning under the control of the State Government were not likely to enhance the tariff in an exorbitant or arbitrary manner. In fact, Electricity Boards of many States in the country were running on huge losses. The Electricity Regulatory Commissions Act, 1998 has been enacted to enhance the generation of electricity and improve efficiency by bringing in private operators. If a licensee (who may be private operator) after getting the licence for supply of electricity in a particular area increases the tariff arbitrarily, the consumers will have no option but to pay the same. In order to guard against such an eventuality, provision has been made that while granting a licence conditions may be imposed and further no tariff can be implemented unless the same has been approved by the Commission.
18. Electricity is not a commodity which may be stored or kept in reserve. It has to be continuously generated and it is so continuously generated electricity which is made available to consumers. Any generator of electricity has to have some alternate arrangement to fall back upon in the event of its generating machinery coming to a halt. The standby arrangement for 550 MVA made by TPC was for the purpose that in the event its generation fell short for any reason, it will be able to immediately draw the aforesaid quantity of power from MSEB. Similarly, the arrangement entered into by BSES with TPC ensured the former of immediate availability of 275 MVA power in the event of any breakdown or stoppage of generation in its Dahanu generation facility. Heavy investment is required for generation of power. For this kind of a guarantee and availability of power, TPC had to pay charges for the same to MSEB. This payment was in addition to the charges or price which the TPC had to pay to MSEB for the actual drawal of electrical energy. The same is the case with BSES qua TPC. The charges paid for this kind of an arrangement whereby a fixed quantity of electrical energy was guaranteed to TPC and BSES at their desire, is bound to constitute a component of the price which they (BSES and TPC) would be charging from their consumers towards the cost of the electrical energy actually consumed by them. The determination or quantification of the amount which is payable for this kind of standby arrangement made in favour of TPC and BSES would in reality mean determination of the price or charges for wholesale or bulk supply of electricity. It will, therefore, clearly fall within the expression "determine the tariff for electricity, wholesale, bulk, grid or retail" as used in Sub-clause (a) of Sub-section (1) of Section 22 and also in the expression "regulate power purchase ..... including the price at which the power shall be procured from the generating companies......." as used in Sub-clause (c) of Sub-section (1) of Section 22. Therefore, the Page 14 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 determination or quantification of the amount which BSES has to pay to TPC falls within the jurisdiction of the State Commission under Section 22 of the Act. This legal position is also reflected by Section 29 of the Act which confers an overriding power and clearly lays down that notwithstanding anything contained in any other law the tariff for supply of electricity, wholesale, bulk or retail shall be subject to the provisions of the Act and shall be determined by the State Commission. This clearly ousts the jurisdiction of any other authority to determine the tariff. It may be noted here that the Act came into force on 25.4.1998 and Maharashtra Electricity Regulatory Commission was formed on 5.8.1999. Therefore, it is not possible to accept the contention of Shri Nariman that the State Government had the authority or jurisdiction on 22.3.2000 to determine or quantify the charges which BSES had to pay to TPC under the terms of the license granted to the former as this was subsequent to the formation of the Maharashtra Electricity Regulatory Commission.
19. Shri Nariman has submitted that TPC gave a notice on 30.9.1998 of their intention to enhance the charges of standby facility provided to BSES from Rs. 3.5 crores to Rs. 15.125 crores per month and this notice having been given under Sixth Schedule (paragraph 1, 3rd proviso) of the Electricity (Supply) Act, 1948, the enhanced charges became effective and operative after expiry of 60 days of notice i.e. with effect from 1.2.1998. The submission is that by operation of law the charges for standby facility stood revised and enhanced with effect from 1.12.1998. In our opinion, the contention raised has no substance. The legal position has undergone a complete change with the enforcement of the Electricity Regulatory Commissions Act, 1998. In view of Section 29 of the Act, the tariff for intra-State transmission of electricity and tariff for supply of electricity in wholesale, bulk or retail has to be determined by the Electricity Regulatory Commission of the State and a licensee cannot by its unilateral action enhance the charges. The provisions of the Act have an overriding effect by virtue of Section (sic) of the Act and, therefore, any provisions of Electricity (supply) Act, 1948, which are inconsistent with the Act would cease to apply and consequently the provisions of Sixth Schedule of the said Act can have no application now. The Sixth Schedule has been made by virtue of Section 57 and 57A of the Electricity (Supply) Act, 1948 and Section 57A contemplates constitution of a Rating Committee by the State Government to examine licensee's charges for the supply of electricity. Section 29(6) of the Act specifically lays down that notwithstanding anything contained in Section 57A and 57B of the Electricity (Supply) Act, 1948, no Rating Committee shall be constituted after the date of the commencement of the Act. The effect of Section 29 and the Regulations framed thereunder is that it is no longer open to a licensee or utility to unilaterally increase the tariff. The tariff can be enhanced only after approval of the Commission and charging of an enhanced tariff which has not been approved by the Commission will amount to Page 15 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 commission of an offence. Therefore, the notice to enhance the charges given by TPC, which was subsequent to the enforcement of the Act, can have no legal effect."
40 In Maharashtra State Electricity Distribution (supra), the Supreme Court observed in para 24 as under:
"24. The first question for consideration is whether the Commission could have quashed circulars issued by the appellant - MSEDCL before its formation. The Commission was constituted under the Act of 1998 on 5.8.1999. The circular issued before that could not have been quashed on the ground that MSEB had no power to issue them without the approval of the Commission. The decisions in that regard of Commission as well as of APTEL are liable to be set aside. In Binani Zinc Limited (supra), this Court held that before Commission came into existence, the power was to be exercised by the State Electricity Board. This Court held thus:
"31. The State Electricity Boards are entitled to frame tariff in terms of the provisions contained in the 1948 Act. The tariff so framed is legislative in character. The Board, as a statutory authority, is bound to exercise its jurisdiction within the four corners of the statute. It must act in all fields, including the field of framing tariff by adopting the provisions laid down in the 1948 Act or the Rules and the Regulations framed thereunder.
32. It is one thing to say that while framing tariff the Board can only take into consideration the provisions laid down in the Schedule appended to the Act and/or the directions contained in the policy decisions issued by the State as also other statutory principles governing the same but then a tariff framed by it cannot be held to be ultra vires only because it did not take into consideration certain principles laid down in clauses (c) to (g) of sub-section (2) of Section 29 of the 1998 Act.
***
41. We have, however, no hesitation in finding that the State Electricity Board had the requisite jurisdiction to revise a tariff till such time as the Commission was constituted and the purposes of the 1998 Act could be achieved through it. Till the time the Regulatory Commission was not constituted by the State of Kerala, the power to determine tariff remained with the Board under the Electricity (Supply) Act, 1948 as it was not repealed by the Electricity Regulatory Commissions Act, 1998. Parliament could not have intended to bring about a situation where no authority would be empowered to determine the tariff Page 16 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 between the date of coming into force of the ERC Act, 1998 and the constitution of the Commission. It is only after the Regulatory Commission is constituted that it will be the sole authority to determine the tariff."
The decision of BSES Ltd. v. Tata Power Co. Ltd., (2004) 1 SCC 195, has been explained in Binani Zinc Limited (supra)."
41 The contention canvassed on behalf of the appellant that the impugned circulars only impose penalty and the same does not amount to tariff fixation, is misconceived and untenable. In fact it cannot be termed as penalty, as understood, but as a Rate of supply of electricity and therefore, Tariff. The Notification issued by the GEB itself on 26 th October 1996 fixing General Tariffs stipulates as under:
"1. Rate HTP - I This Tariff will be applicable for supply of electricity to H. T. Consumers contracted for 100 KVA and above for regular power supply and requiring the power supply for the purposes not specified in Rate HTP-II and HTP-IV.
(A) DEMAND CHARGES
i) For billing demand upto contract demand:
Rs.83/- per KVA per month for first 500 KVA of billing demand. Rs.95/- per KVA per month for next 500 KVA of billing demand. Rs.155/- per KVA per month for next 1500 KVA of billing demand.
Rs.180/- per KVA per month for billing demand in excess of 2500 KVA.
(ii) For billing demand in excess of contract demand.
a) Rs.300/- per KVA per month for billing demand in excess over the contract demand for the excess demand upto 10% of the contract demand or 100 KVA whichever is less.
b) Rs.500/- per KVA per month for the remaining excess billing demand over the contract demand."
(emphasis supplied) Page 17 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 42 The impugned Commercial Circular dated 21 st December 1998, prescribes a Tariff in the Clause 15 being three times of the demand charges of the applicable HT Tariff for excess drawal of power over the contract demand, which therefore, seeks to revise the Tariff fixed by the Tariff Notification dated 26th October 1996, prescribing a rate of INR 300 / INR 500, per KVA per month for billing demand in excess over the contract demand. Apart from the fact that such Tariff Notification cannot be amended by a circular, it is evident that what is termed as penalty is in fact a Rate applicable in a given set of circumstances and therefore, clearly a part of the Tariff. It has been held in Oswal Woollen Mills Ltd. vs. Punjab State Electricity Board and another reported in (2006) 13 SCC 719 (para 14) that surcharge by way of additional rate or penalty can only be levied in terms of a Tariff Notification and not by way of a circular. In Oswal Woollen (supra), the Supreme Court observed in para 14 as under:
"14. The Board is a creature of the statute. It is constituted in terms of Section 5 of the Act. It is incorporated and can sue and be sued in its own name in terms of Section 12 thereof. Section 46 of the Act provides for the Grid Tariff and Section 49 thereof empowers the Board to make provision for the sale of electricity by it to persons other than the licensees. While exercising the said power the Board would be governed by the general terms which may be issued by the State in terms of Section 79 of the Act. Surcharge by way of additional rate or penalty can be levied only in terms of a tariff notification. Such a power, therefore, can be exercised by the Board only in exercise of its statutory power and not by reason of an executive power. In terms of a circular letter issued by the Board, therefore, neither any surcharge nor any penalty could be levied."
43 The objection raised by the appellant to the jurisdiction of the Commission for determining the subject matter is similarly misconceived.
44 Section 22(2)(e) of the ERC Act confers the jurisdiction on the Page 18 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
State Commission to regulate the working of the licensees. Section 29 of the ERC Act read with Section 49 of the 1948 oblige the GEB to supply electricity on payment of Tariffs, which are fixed and charged in accordance with law. As held in Brihanmumbai Electricity Supply and Transport Undertaking vs. Maharashtra Electricity Regulatory Commission (MERC) and others reported in (2015) 2 SCC 438 (paras 7 to 9), the Regulatory Commission has the power to require a licensee to fulfill its obligations under the Act. We quote the relevant observations of the Supreme Court made in paras 7 to 9 as under:
"7. We have already stated in brief the four contentions which were raised by BEST before the Regulatory Commission. Same contentions were raised before the Appellate Tribunal, which are the submissions before us as well. Therefore, we proceed to deal with these submissions hereinafter:
RE: Jurisdiction of the Regulatory Commission.
8. This contention was raised primarily on the ground that there was an alternative remedy provided to the consumer to raise his grievances before the Consumer Grievances Redressal Forum (CGRF) established under Section 42 (5) of the Act. Therefore, the consumer should have approached the said Forum instead of filing petition before the Regulatory Commission. This contention is totally misconceived and rightly rejected by the authorities below. As noted above, petition was filed by the consumer seeking direction against TPC to supply electricity to him. Thus, he approached the Regulatory Commission to enforce a distribution licensee obligation under the Act. As on that date, he was not the consumer of TPC but wanted to become its consumer. In so far as CGRF is concerned, which each distribution licensee is required to set up under Section 42 (5) of the Act, it deals with the grievances of the consumer. Consumer is defined under Section 2 (15) of the Act and reads as under:
"2.(15) .... any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purposes of receiving electricity with the works of a licensee, the Government or such other person, as the case may be."Page 19 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022
C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
9. Thus, respondent No.3 not being a consumer could not have approached CGRF. Further, we find that in Maharashtra Electricity Regulatory v. Reliance Energy Ltd. (2007) 8 SCC 381, this Court has held that the Regulatory Commission has the power to require a licensee to fulfill its obligations under the Act. Thus, we are of the opinion that the Regulatory Commission had the requisite jurisdiction to entertain the petition filed by the consumer. Presumably, for this reason, this contention was pressed half hearted before us and given up in the middle."
45 In Maharashtra Electricity Regulatory Commission vs. Reliance Energy Ltd and others reported in (2007) 8 SCC 381 (paras 16 to 20), it has been laid down that there is no manner of doubt that the Commission is empowered to enforce the conditions of license, issue general directions to the licensees for charging only as per the Tariff fixed under the Act so that the public is not put to difficulty or harassed. It is evident from the scheme of the ERC Act and the GERC (Conduct of Business) Regulations, 1999 that the Tariff fixed by the State Commission under Section 29 of the ERC Act is in fact a direction to the GEB and the non-compliance thereof would result into imposition of penalty under Section 45 read with Regulation 89. Therefore, the State Commission was clearly empowered to hear and decide the petitions filed by the respondent, particularly, when it was a dispute in relation to the revision of Tariff by the impugned circulars, which is an issue concerning consumers at large. It has been correctly held by the Commission that any question which touches the issue of Tariff directly or otherwise has to be decided by the Commission. We quote the relevant observations of the Supreme Court made in paras 16 to 20 as under:
"16. A comprehensive reading of all these provisions leaves no manner of doubt that the Commission is empowered with all powers right from granting licence and laying down the conditions of licence and to frame regulations and to see that the same are properly enforced and also Page 20 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 power to enforce the conditions of licence under sub- section (6) of Section 128.
17. Thus, insofar as the first contention of the learned counsel for the respondents that the Commission has no power is concerned, we are of the view that the same is wrong. In this behalf the provisions of The Electricity Act, 2003 are quite clear and categoric and Section 128(6) empowers the Commission to get the conditions of licence enforced. But the question is whether the said power under Section 128(6) has been rightly exercised by the Commission or not. After clearing the first hurdle, that the Commission has power to issue directions, we shall now examine whether the direction given by the Commission in the present case is correct or not.
18. When the Commission received a spate of complaints from consumers against its licensees/distribution companies that they are arbitrarily issuing supplementary/amended bills and charging excess amounts for supply of electricity, it felt persuaded to invoke its general power to supervise the licensees/distribution companies and in that connection issued notice dated 3.8.2004. There can be no manner of doubt that the Commission has full power to pull up any of its licensee or distribution company to see that the rules and regulations laid down by the Commission are properly complied with. After all, it is the duty of the Commission under Sections 45(5), 55(2), 57, 62, 86, 128, 129, 181 and other provisions of the Act to ensure that the public is not harassed.
19. In exercise of this general power notice dated 3.8.2004 was issued when mass scale supplementary/amended bills were issued to the consumers. When these consumers approached the Commission, the Commission directed its licensees to immediately review their billing policies and bring the same in conformity with the statutory provisions of the Act. The Commission did not get an investigation made under Section 128(1) which it could have done, and without that, and without getting a report under Section 128(5) it passed an order directing refund of the amounts collected by the licensees/distribution companies, which in our opinion was not permissible, since such a direction could, if at all, be given after getting a report of the investigation agency. The Commission could have made an investigation and got a report from the investigation agency and on that basis directions could have been given. However, that was not done. In these circumstances, in our opinion, the view taken by the Appellate Authority in the impugned order to that extent is correct that the individual consumers should have approached the appropriate forum under Section 42(5) of the Act.
20. Thus while we hold that the Commission has power to issue a general direction to licencees that they should abide by conditions of Page 21 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 the licence issued by them and charge only as per the tariff fixed under the Act so that the public at large should not be harassed, we are of the opinion that so far as the blanket direction given by the Commission for refunding the entire amount without making a proper investigation whether the issue of supplementary/amended bills was really warranted in every case or not is unsustainable. Here the Commission has gone beyond its jurisdiction. After all the distribution/ generating companies have to incur expenses for generation/distribution of power, and we cannot at the same time give license to the consumers to commit theft of electricity or to be benefited by improper functioning of the meter to the disadvantage of the distribution/generating company."
46 The impugned supplementary bills have been issued on the basis of the Tariff revised vide the impugned circular No.687 and circular No.687/A. By the circular No.687, the charges were enhanced to 300% of on INR 300/INR 500 per KVA per month fixed vide Tariff Notification dated 26th October 1996 for billing over the contract demand. The Tariff at INR 300/INR 500 per KVA per month for the excess billing over the contract demand had been paid by the respondent and it contains additional amount which was demanded in the impugned supplementary bills. The corrigendum dated 26th October 1999 revised the Tariff to three times the normal of INR 180 (therefore, InR 540 per KVA instead of INR 300 / INR 500 per KVA per month as per Tariff Notification dated 26th October 1996) and not three times of the penal Tariff of INR 500. The impugned supplementary bills were revised accordingly and the amount of INR 41,56,149/- was demanded and paid under protest by the respondent. Therefore, the impugned supplementary bills are issued on the basis of the Tariff revised under the impugned circulars which have been issued without jurisdiction or authority in law. The dispute therefore is clearly not a private dispute between a consumer and GEB as sought to be projected by the appellant but illegal revision of Tariff.
47 Section 22(1)(n) of the ERC Act empowers the State Commission Page 22 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
to adjudicate upon disputes and differences between the licensees and and utilities and the GEB is a licensee and the respondent has established a captive power plant and is therefore a utility as defined under Section 2(l) of the ERC Act read with Section 44 of the 1948 Act and the petition therefore was clearly maintainable.
48 The matter can also be looked into from a different angle as under.
49 In the petition No.71 of 2002, the petitioner therein M/s. Reliance Petroleum Ltd. challenged the very same two commercial circulars i.e. No.687 dated 21st December 1998 levying the parallel operation charges @7.5% of the demand charges and the circular No.706 dated 28 th January 2002 levying the parallel operation charges to a ceiling of Rs.8 Lakh per month. The challenge before the Commission was on the following grounds, as noted by the Commission in its impugned order:
"(A) This Commission constituted under Section - 17 of the Electricity Regulatory Commissions Act, 1998 has been conferred with the powers under Section - 22 of the said Act to determine the tariff which would include the charges in the nature of parallel operation charges and that therefore, the GEB had no authority to issue any such circular levying or revising any charges including the parallel operation charges, which are essentially in the nature of tariff and that therefore, the above said commercial circulars issued by the GEB deserve to be quashed and set aside.
(B) The GEB had not taken the prior approval of the State Government, as envisaged under the power policy nor has sought any approval of this Commission and therefore also the said circulars are bad in law and deserve to be quashed and set aside.
(C) This Commission vide the judgment and orders dated 31 st August 2000 in case No.24 of 2000, has taken a view that the GEB has no power, authority or jurisdiction to issue any circular revising the rates of parallel operation charges under the CPP policy as only the Commission is enjoined with all such powers by virtue of Section - 22 Page 23 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 of the ERC Act, 1998.
(D) The synchronization of the CPP of the petitioner with the GEB was only for the purpose of export and that the parallel operation charges can be levied only in case of a CPP which is synchronized with the GEB Grid for the purpose of import of power.
(E) Factually, there has not been any release of power by the respondent GEB and as such no parallel operation charges could have been levied or recovered.
(F) The petitioner had withdrawn their application for release of the power for the purpose of import vide letter dated 15 th April 1999, which has been approved by the respondent Board and that despite this GEB have started recovering the POC from the export bills in spite of the fact that there is no import at all.
(G) Without prejudice to the above and contentions, after issuance of the circular No.706 dated 28th January, 2000 which is made operative retrospectively from 1st April, 1999, in any event, the GEB would not be justified in continuing to levy the parallel operation charges and the recovery made with effect from 1 st April, 1999 ought to have been refunded after the issuance of the above said circulars."
50 The following was prayed in the petition No.71 of 2002 by the petitioner M/s. Reliance Petroleum Ltd:
"(A) Your Honour may be pleased to quash and set aside the circular No.687 dated 21-12-1998 in so far as it levies parallel operation charges at 7.5% of demand charges and commercial circular No.706 dated 28-1-
2000 revising the rate of the said parallel operation charges to a ceiling of Rs.8 Lakhs per month.
(B) Your Honour may be pleased to direct the respondent to refund the amount of Rs.1,62,14,413/- (Rupees One Crore Sixty Two Lac Fourteen Thousand Four Hundred and Thirteen only) recovered by it under the aforesaid two circulars towards parallel operation charges for the period between April, 1999 to July, 2000 together with interest at the rate of 24% per annum from the date of recovery till realization."
51 So far as the Petition No.70 of 2002 filed before the Commission with which we are concerned in the present appeal, the grounds raised therein, as noted by the Commission in its impugned order, are as Page 24 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 under:
"(A) The tariff would include the charges levied for either supply of electricity or contract demand and would also include levy for excess drawal, beyond the contract demand and any such levy of charges being in the nature of tariff can be determined by this Commission only, and that the respondent GEB is not authorized to issue any such circulars.
(B) This Commission has taken a view that after constitution of this Commission, no such circulars effecting the tariff rate could be issued by the GEB or the State Government.
(C) This Commission in case No.24/2000, under the orders dated 31 st August, 2000 has taken a view that the GEB has no power or authority to issue circulars revising the rates of parallel operation charges under CPP policy as this Commission is enjoined with such powers.
(D) This Commission while dealing with the question of parallel operation charges has already made it clear that it is open to the respondent GEB to charge fixed demand charges as per the applicable tariff rate only.
(E) The bills issued by the respondent GEB are in direct conflict with the tariff fixed by the Commission under the orders dated 10 th October 2000 and that the same would be the position of the circulars under which they are issued.
(F) Even under the power policy also clause (illegible) contract demand and drawal of the power subjected to the applicable tariff of GEB which (illegible) case would the tariff of 1996."
52 Thus, the petition No.71 of 2002 was with respect to levying and collecting of the parallel operation charges. Whereas the petition No.70 of 2002 before the Commission was one relating to the charges along with the penalty for the excess drawal of power for a particular period of time. The Commission proceeded to allow the petition No.70 of 2002 holding as under:
"47 It is not disputed that as a Commission constituted under Section
- 17 of the Electricity Regulatory Commission Act, 1998, our jurisdiction remains well defined under the provisions contained in Section - 22 of the Act of 1998. The said statutory provisions say that, Page 25 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 the Commission shall discharge the following functions-
(a) to determine the tariff for electricity, wholesale, bulk, grid or retail, as the case may be, in the manner provided in section 29;
(b) to determine the tariff payable for the use of the transmission facilities in the manner provided in section 29;
(c) to regulate power purchase and procurement process of the transmission utilities and distribution utilities including the price at which the power shall be procured from the generating companies, generating stations or from other sources for transmission, sale, distribution and supply in the State;
(d) to promote competition, efficiency and economy in the activities of the electricity industry to achieve the objects and purpose of this Act.
48 Sub-Section (2) of Section - 22 says that the State Government may by notification in the Official Gazette, confer certain other functions enumerated therein upon the State Commission. It is an admitted position, that such a notification has been issued by the State Government conferring upon a Commission all the functions except the one listed at Section - 22(2) (a) of the Act. Thus, we, as the Commission have got the jurisdiction, power and authority to discharge the functions enlisted under Section 22(1) and also (2) thereof, except the one listed at Section 22(2)(a).
49 A reference to the provisions contained in Section 22 (1) and (2) would go to show that, it is the function of the State Commission to determine the tariff for the electricity wholesale, bulk, grid and retail. It is also our function to determine the tariff payable for the use of the transmission facilities. It is also our function to regulate the power purchase, procurement process of the transmission utilities and distribution utilities. Sub-Section - 2 (c) of Section - 22 of the Act of 1998 makes it clear that it is our function to regulate the operation of the power system within the State.
50 Looking to the above said provisions, it could be said without any difficulty that whenever a question arises which would be touching the question of tariff, directly or otherwise the same shall have to be decided by the Commission. There is a possibility of describing certain charges under a different nomenclature, but despite the use or the employment of the different language to define the charges and to put them different nomenclature would remain to be the question regarding the tariff, which the State Commission shall have to decide.
51 Looking to the above said opinion of ours, in our view, the Page 26 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022
contention being raised by the learned counsel for the GEB regarding the lack of jurisdiction on our part cannot be accepted because in our petition we are concerned with the parallel operation charges, while in the second petition, we are concerned with the charges for the excess drawal of power.
52 Learned counsel Mr. Nirav K Majumdar, who appears on behalf of the GEB places strong reliance upon a decision pronounced by us in petition No.63 of 2002 with petition No.54 of 2002 dated 13/3/2002 / 22/3/2002. In the above said orders, two petitions arising under almost similar circumstances, between the same parties came to be decided by us.
53 It should be noticed with pertinence that, there the question was regarding our jurisdiction to entertain, hear and decide the petitions taken out by the applicant, where there was the service of the Notice under Section 24 of the Indian Electricity Act, 1910 and the demand thereof within the statutory period and the threat of discontinuance of the supply of power.
54 As those petitions also involved the question of the requisite jurisdiction on our part, we have preferred to frame the question and then to answer the same. The question framed by us which is eloquent and self-explanatory at para 6 of that decision reads thus:
"Whether, upon the facts and in the circumstances of the case, we have the requisite jurisdiction, power or authority, to entertain and decide the petitions, taken out by the applicant, which centre around the Notice u.s. 24 of the Indian Electricity Act 1910, for the alleged non-payment of charges for energy running in crores of rupees, the demand thereof within the statutory, stipulated period, or else the possibility of discontinuance of the supply of power?"
55 A bare look at the frame of the above said question would go to show that it was a dispute between a private consumer and the GEB and that there was the non-payment of the charges for energy amounting in crores of rupees and that there was a Notice under Section 24 of the Indian Electricity Act, 1910, calling upon the consumer to pay up the amount within the statutory period or else be ready to face the possibility of the discontinuance of the supply of power.
56 It is in the background of these facts and circumstances that we have come to the conclusion, that we have no jurisdiction to entertain, hear and decide the above said petitions. It has been brought to our notice that the said orders of ours have been upheld and confirmed by the High Court of Gujarat. Any how, the facts remain that our orders Page 27 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 were in the above said facts and circumstances of the case are based upon well defined parameters.
57 As pointed out by us, here, the question and the facts were entirely different and therefore, we will not be able to draw any analogy from the said decision of ours, to come to the conclusion that we have no jurisdiction to hear and decide these two petitions also.
58 Moreover, according to us, the question regarding the parallel operation charges falling within our jurisdiction does not remain res- integra, but has has been well settled by the orders of this Commission in case No.24 of 2000 dated 31/8/2000 in which at para 18 it has been said like this-wise-
"It will be clear from the above that the Commission has power to regulate the power system of the State and the parallel operation charges are only the means to regulate such system. The Commission is therefore, of the considered view that determination of the parallel charges is well within the jurisdiction of the Commission in terms of the provisions of Section 22(1)(a) and Section 22(2)(c) of the Electricity Regulatory Commissions Act, 1998. It is also significant that none of the parties to these proceedings has contested the jurisdiction of the Commission."
59 The above said para put a quietus to the question as to whether we have got the power to regulate the parallel operation charges. The question regarding the excess drawal charges also would come within our purview.
60 We therefore are of the opinion that the contention coming from the learned counsel for the GEB that we at this Commission had no jurisdiction to entertain, hear and decide these petitions cannot be accepted. We accordingly reject the same.
PETITION NO.71 OF 2002:
61 Taking up the petition No.71 of 2002, for consideration on merits, we would only reiterate that it pertains to the parallel operation charges. The power policy of the Government of Gujarat as expressed in the resolution dated 9th November, 1998 requires to be studied. Clause No.5 pertains to the fees and the charge. It has been said therein, that the parallel operation charges shall be charged at the rate fixed by the GEB / License with the approval of the Government. There is a letter going to the GEB from the petitioner dated March 10, 1999 showing that there was a meeting between the officers of the petitioner with the Hon'ble Chief Minister of the State and it was agreed at that time, that Page 28 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 the petitioner shall be providing their surplus power to GEB Grid. Clause No.7 of the said letter makes it clear right from the beginning that as paralleling of the petitioner CPP with the GEB shall have to be done for the export of the power the GEB should not levy any inter connection charges and electricity duty to ensure low tariff charge for the power exported to GEB.
62 The letter dated 16th March, 1999 going to the GEB from the petitioner goes to show that ultimately there was a request for the necessary instructions for the release of 5 MVA power on LILO interconnection at the earliest of the GEB. This letter would go to show that though the petitioner had agreed to export the power, there was also a request for the release of 5 MVA power on LILO interconnection which would be the import for the petitioner.
63 The letter from the GEB to the petitioner dated 18 th March 1999 makes the position far more clear. It shows that the GEB had agreed to purchase 60 MW of power on need basis subject to certain conditions. One of the conditions is that the power shall be exported to GEB through newly constructed LILO line which was meant for availing 5 MVA by the petitioner. It is also said that this line will be utilized for the import of the power from GEB also. This letter therefore, would clarify the situation by saying that there was to be an export of power to the GEB, but was also an arrangement for the import of power for which parallel operation charges could have been levied. The letter dated March 19, 1999 addressed to the GEB by the petitioner confirms that there was a granted reduction in contract demand from 7.5 MVA to 5 MVA and the release of the said power supply on LILO interconnection.
64 But it was felt at a later juncture that though the GEB had agreed to sell the power to the petitioner. Probably the petitioner would not be in need of the same and that therefore there should be the implementation of some mechanism under which it could be ensured that the petitioner does not import the GEB's power.
65 The letter dated March 29, 1999 says that a legal issue may arise due to likely inward flow of power to the petitioner in some rare situation and that to avoid any such legal issue. The petitioner shall install the Reverse Power Relay so that in the event of inward flow of power from the GEB Grid to the petitioner, relay will trip and open the Circuit Breaker in very short period of milliseconds. It is also suggested that the arrangement for the relay and its installation would be carried out jointly with the GEB, in presence of their officials. It was also made clear that the GEB can depute their officers to examine the working of the system.
66 It is also emphasized in this communication that till the GEB power supply is released to the petitioner, the question of parallel Page 29 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 operation charges does not arise.
67 As noticed above, the respondent GEB had agreed to release 5 MVA power supply connection on 132 KV through LILO to the refinery site of the petitioner. But the petitioner under letter dated April 16, 1999 had requested the GEB to cancel the above arrangement. This, in our view, is an important development."
53 While allowing the petition No.71 of 2002 with respect to parallel operation charges, the Commission held as under:
"70 The petitioner have challenged the Commercial Circulars No.687 and 706 dated 21st December, 1998 and 28th January 2000. The subsequent circular dated 28th January 2000 amends the clause No.19 of the earlier circular, so far as it relates to parallel operation charges with effect from 1st April 1999 as under:
(A) THE RATES Capacity of CPP (Captive Rate of Recovery of POC Power Plant) Upto 1000 KVA 10% of the demand charges corresponding to the CPP capacity 1001 to 10000 KVA 7.5% of the demand charges corresponding to the CPP capacity or Rs.8,900/- per month whichever is higher.
10001 to 50000 KVA 5% of the demand charges
corresponding to CPP capacity
or Rs.1,25,363/- per month
whichever is higher.
50001 KVA and above 2.5% of the demand charges
corresponding to the CPP
capacity or Rs.4,43,575/- per
month whichever is higher
with a further provision of the
ceiling of Rs.8,00,000/-.
71 The above said amendment in the guise of the Commercial
Circular in our opinion directly, encroaches upon the jurisdiction of this Commission. It has been said by this Commission in the orders dated 31st August 2000 in case No.24/2000 that the Commission has got the powers to regulate the power system of the State and the Parallel Page 30 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 operation charges. Looking to this position, it is clear that such a amendment under the circular dated 28th January, 2000 could not have been issued and the same appears to be nonesty.
72 This Commission came to be established on 12/11/1998 and the Commission came to be functioned with effect from 19/4/1999. It could not be urged successfully that the Commercial Circular No.687 dated 21st December, 1998 would be valid even after the establishment of the Commission.
73 Thus, it appears that the petitioners have been able to establish their case before us and that looking to the above said clear position, and by placing reliance upon the say coming from the GEB in their response / counters and the contentions from the learned counsel,s we would not be able to reject the claim made by the petitioner before us. Accordingly, we allow this petition which has been registered as case No.71 of 2002 and quash and set aside the circular No.687. So far as Board's circular No.706 dated 28-1-2000 is concerned, we should point out that the same came to be quashed by us in our order dated 31-8- 2000 in case No.24/2000.
74 Moreover, even if the validity of the above said circulars are not scrutinized on the touchstone of the legality thereof, the position is entirely different when one looks at the Commercial Circular No.706 dated 28th January 2000. This circular requires to be read alongwith the Statement presented by the petitioner which shows the period of export between April 1999 to July 2000. The Commercial Circular stated above, while amending clause No.19 of the earlier circular, lays down two conditions, under para B. Para B(2) shows that if the period of sale of power to the GEB exceeds 10 days in a month (not necessarily in a row) no parallel operation charges shall be payable. The statement presented by the petitioner as the Annexure to the petition, shows that the petitioner had exported to GEB the power worth Rs.1,62,14,413/- during the above said period. In nutshell, one can say that, during all these months, there was transport or sale of power from the petitioner to the GEB, at least for a period of 10 days every month. Therefore, even if the above said circulars are to be upheld by us, then also looking to the above said condition in the commercial circular No.706 dated 28th January 2000, we must hold and decide that the parallel operation charges could not have been claimed by the GEB and that the amount in question could not have been recovered / deducted by the GEB from the bills of the petitioner. Viewing the entire question from this way also, in our opinion, the petitioner must succeed. The net effect would be that as we have said in para Nos.73 and 74 hereinabove, the petition No.71/2002 required to be allowed on this count also.
75 The petitioner has prayed for appropriate directions to the respondent to refund the amount of Rs.1,62,44,413/- recovered by the Page 31 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 GEB under the above said two circulars, together with the interest at the rate of 24% per annum, from the date of recovery, till realization.
76 Learned counsel Mr. Majmudar who appears on behalf of the GEB has urged that even in case of the quashing and setting aside the above said two circulars, we should restrain ourselves from ordering or directing the refund of the above said amount. Learned counsel urges that probably this demand could have been barred by law of limitation also. But on a careful consideration of this contention and the counter contention coming from the learned Sr. Counsels Mr. K. S. Nanavati, it appears that such a splitting of reliefs is neither permissible under law nor would be practicable in reality.
77 There is one more facet to this aspect of the matter. The justice delivery system either purely judicial or quasi judicial does not contemplate the splitting of the prayers under which some prayers could be granted by the Special Forum and some could be refused on the ground that the party concerned, after having succeeded before a special forum should go before the General Forum for the redressal of the rest of the grievances. We, therefore, are of the opinion that the above said amount should be refunded to the petitioner by the GEB, within a period of three weeks thereof alongwith the interest @6% per annum from the date of recovery till the refund."
54 The Commission proceeded to observe the following so far as the petition No.70 of 2002 is concerned from which the present appeal originates:
"79 Having decided the earlier petition, we may now, turn to the contentions coming from learned counsel Mr. K. S. Nanavati, who appears for the petitioner in this petition. The prayer is for quashing and setting aside the circular No.687 dated 21 st December, 1998 and the corrigendum dated 687-A dated 26th October 1999 on the ground that they are running against and counter the GEB tariff as determined on 26th October 19996 and the GERC tariff determined on 10 th October 2000. It is on these basis of the main prayer, that the petitioner claims the consequential relief i.e. the refund of the amount in sum of Rs.41,56,149/-. The supplementary bills issued for the month of January 2001 and September 2001 in sum of Rs.44,13,468/- and Rs.16,52,055/- are also being challenged on the ground that they are in violation of the above said tariff and further more on the ground that they are for the period, after the GEB tariff orders came to be passed by this Commission on 10th October, 2000.Page 32 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022
C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 80 Of course, the contention coming from learned counsel Mr.
Majumdar, based upon the response of the counter filed by the GEB is that this being a dispute between a consumer and the Board would not fall within our jurisdiction. We may hasten to point out that here in above, we have considered this question as a question common to both the petitions and have taken a view that this Commission has got the requisite jurisdiction to entertain, hear and decide these two petitions.
81 Learned counsel Mr. Majumdar, for the GEB urges that previously, thee was a policy for the CPPs and that there were the tariffs decided by the GEB and that there is nothing wrong on the part of the GEB in further revising the tariff under the circulars, which are being a challenge in the petition.
82 With a view to appreciate the rival contentions, we would firstly examine the resolution dated 9th November 1998 which is in respect of the power policy of the State of Gujarat, announced in December 1995. Clause No.8 of the above said resolution, relates and refers to the contract demand. It has been said that the drawal of power for the State Grid by the industrial units would be subjected to the applicable tariff of GEB / Licensee. The GEB electricity tariff, which are on record has a specific clause regarding the rate of HTP-1 and the demand charges and for billing the demand, in excess of contract demand. The relevant portion of this clause runs as under:
"(ii) For billing demand in excess of contract demand:
(a) Rs.300/- per KVA per month for billing demand in excess over the contract demand for the excess demand upto 10% of the contract demand or 100 KVA whichever is less.
(b) Rs.500/- per KVA per month for the remaining excess billing demand and contract demand.
83 The reference to the above said clause, therefore, would go to show that Rs.300/- per KVA per month would be the tariff for billing demand in excess over the contract demand, provided the excess demand is up to 10% of the contract demand or 100 KVA, whichever is less. It is further clear that so far as the remaining excess demand is concerned, it shall be at the rate of Rs.500/- per KVA per month. In brief, this clause makes a distinction between the excess demand upto 10% and the excess demand which would exceed 10%. Any how, additional charges would be attracted for the remaining excess billing demand. Therefore, if there is an excess demand, it should be billed at Rs.300/- per KVA per month, if its upto 10% of the contract demand. The tariff of Rs.500/- per KVA per month would be attracted to the remaining excess demand which would exceed 10% of the contract demand.
Page 33 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 84 A joint reading of the resolution dated 9 th November 1999
defining the power policy of the State of Gujarat as announced in December, 1998 and the electricity tariff decided by the GEB, the above would be the position. But the things get changed with the two circulars. Circular NO.687 dated 21 st December 1998 all of a sudden says that instead of GEB tariff as discussed above, there shall be the revised tariff for the exceed drawal of power. Clause NO.15 of the said circular runs as under:
"Any excess drawal of power beyond contract demand shall be charged at the rate which shall be three times of demand charges of applicable HT tariff per KVA and the energy charges shall be charged at applicable HT tariff."
85 Thus, it is clear that the rate has been increased by three times under this circular dated 21/12/1998.
86 Circular No.687-A dated 26/10/1999 is really speaking a clarification or corrigendum. This is apparent from the language employed, while drafting this circular. There has been a focused attention on clause No.15 of the circular No.687 dated 21 st December 1998. It is explained that instead of Rs.3 x 500/- = Rs.1500/- per KVA per month of the demand in excess of the contract demand as per clause No.15 of the said circular, row, the excess demand charges shall be recovered at Rs.3 x 180/- = Rs.540/-. Thus, this corrigendum revises the tariff for the excess demand.
87 But it should not be overlooked that, this relates to the determination of the tariff and after the establishment of this Commission, the question of tariff could not have been decided by the GEB. If once this view is accepted, it is clear that the GEB could not have made any changes in the tariff after the establishment of this Commission. It is not in dispute that, this Commission came to be constituted with effect from November, 1998. It is thus clear that, neither the Circular No.687 dated 21st December, 1998 nor the corrigendum circular No.687-A dated 25/10/1999 could have been issued by the GEB, because the question regarding the fixation, determination or re-determination of tariff would fall within the purview of this Commission alone. Thus, it appears that the above said two circulars are bad in law and could not have been relied upon by the GEB.
88 Moreover, this Commission has issued the Tariff Orders for the GEB in case No.19 of 1999 on 10 th October 2000 part II of these Tariff Orders relates to the tariffs for supply of electricity at High Tension. Para 10.1.2 relates to the billing demand in excess of contract demand. The tariff fixed by this Commission, there under is Rs.335/- per KVA per Page 34 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 month. Thus, it is clear that, with effect from 10 th October, 2000, tariffs for billing demand in excess of the contract demand would be as stated above. If once this position is accepted, it becomes clear that after established that, the above said circulars are bad in law, the petitioner also is found to be able to establish that the supplementary bills as described in para 11C are also bad in law. This is especially so, because these are the supplementary bills issued for the month of January 2001 and September 2001. These supplementary bills could not have been against the tariff prescribed by this Commission for the GEB under the order dated 10th October, 2000.
89 Therefore in our opinion, the above said two circulars, levying higher charges for drawal of power in excess of contract demand are illegal, bad in law and not sustainable and therefore require to be quashed and set aside. We order accordingly."
55 Thus, the circular No.687 dated 21 st December 1998 as well as the corrigendum No.687-A dated 25th October 1999 came to be quashed and set aside by the Commission on the ground that after the Commission was constituted, the Board could be said to have been denuded of its authority to fix / modify any tariff without the approval of the Commission. The Commission took the view that such circular could not have been issued because the fixation, determination or re- determination of tariff would fall within the purview of the Commission alone.
56 Indisputably, there is no challenge by the appellant - Board to the order passed by the Commission so far as the petition No.71 of 2002 is concerned. In both the petitions i.e. 70 of 2002 and 71 of 2002 resply, the issues raised were common i.e. (1) validity of the circular No.687 dated 21st December 1998, and (2) jurisdiction of the GERC to adjudicate the said petitions. The contention of Mr. Joshi, the learned Senior Counsel appearing for the respondent No.1 as regards the findings on the legality and validity of the Commercial circular No.687 dated 21st December 1998 and also the jurisdiction of the Commission to Page 35 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022 C/FA/1610/2004 JUDGMENT DATED: 11/03/2022 adjudicate the two petitions being hit by res judicata appears to be well- founded and must be accepted. By Section 11 of the Code of Civil Procedure, insofar as relevant, no Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a "former suit" between the same parties and has been heard and finally decided.
57 In the aforesaid context, we may refer to the observations made by the Supreme Court in the case of Premier Tyres Limited (supra) as under:
"4. Although none of these decisions were concerned with a situation where no appeal was filed against the decision in connected suit but it appears that where an appeal arising out of connected suits is dismissed on merits the other cannot be heard, and has to be dismissed. The question is what happens where no appeal is filed, as in this case from the decree in connected suit. Effect of non filing of appeal against a judgment or decree is that it become final. This finality can be taken away only in accordance with law. Same consequences follows when a judgment or decree in a connected suit is not appealed from."
"6. Thus the finality of finding recorded in the connected suit, due to non filing appeal, precluded the Court from proceeding with appeal in other suit. In any view of the matter the order of the High Court is not liable to interference."
58 In the result, the appeal fails and is hereby dismissed with no order as to costs.
(J. B. PARDIWALA, J) (NIRAL R. MEHTA,J) CHANDRESH Page 36 of 36 Downloaded on : Sat Dec 24 12:37:29 IST 2022