Karnataka High Court
Karnataka Power Transmission ... vs M/S Shamanur Sugars Limited on 22 May, 2023
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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WP No. 46495 of 2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF MAY, 2023
BEFORE
®
THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 46495 OF 2012 (GM-KEB)
BETWEEN:
1. KARNATAKA POWER TRANSMISSION
CORPORATION
A COMPANY INCORPORATED UNDER
COMPANIES ACT, 1956,
HAVING ITS REGISTERED OFFICE,
AT CAUVERY BHAVAN, AMBEDKAR VEEDHI,
BANGALORE-560 001,
REPRESENTED HEREIN BY
FINANCIAL ADVISOR
2. STATE LOAD DISPATCH CENTRE
KPTCL, NO.28, RACE COURSE ROAD,
BANGALORE-560 009,
REPRESENTED HEREIN BY ITS
CHIEF ENGINEER.
... PETITIONERS
Digitally signed (BY SRI. S. SRIRANGA, SENIOR COUNSEL FOR
by
NARAYANAPPA SMT. SUMANA NAGANAND AND
LAKSHMAMMA SMT. ASHWINI N. RAVINDRA, ADVOCATES)
Location: HIGH
COURT OF
KARNATAKA
AND:
1. M/S SHAMANUR SUGARS LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
#374 4TH MAIN P.J.EXTENSION,
DAVANAGERE KARNATAKA-577 002.
REPRESENTED HEREIN BY MANAGING DIRECTOR,
2. CENTRAL ELECTRICITY REGULATION
COMMISSION
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WP No. 46495 of 2012
3RD & 4TH FLOOR, CHANDERLOK BUILDING,
36, JANPATH, NEW DELHI-110001,
REP.BY ITS SECRETARY.
... RESPONDENTS
(BY SRI. SHRIDHAR PRABHU, ADVOCATE FOR R1;
SRI. HARSHA GUPTA, ADVOCATE FOR
SRI. AJAY RAO, ADVOCATE FOR R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER
DATED 9.10.2012 PASSED BY SECOND RESPONDENT IN PETITION
NO.124/MP/2011 VIDE ANNEXURE-E.AND ETC.
THIS WRIT PETITION COMING ON FOR ORDERS AND HAVING
BEEN RESERVED FOR ORDERS ON 01.02.2023, THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:
ORDER
1. The petitioners - Karnataka Power Transmission Corporation (KPTCL) and State Load Dispatch Centre (SLDC) are before this Court seeking for the following reliefs:
1. Quash the order dated 09.10.2012 passed by second respondent in petition No.124/MP/2011 (Annexure-E) 1(a) Declare the Regulation 8 of the CERC (Open Access in Inter State Transmission) Regulations 2008 dated 25.1.2008 to be ultravires of the Electricity Act, 2009.
2. Declare that the order dated 9.10.2012 passed by second respondent in Petition No.124/MP/2011 (Annexure-E) is without jurisdiction. -3- WP No. 46495 of 2012
3. Declare that the second respondent in exercise of powers U/s 79 of the Electricity Act, 2003 cannot sit in appeal over the directions issued U/Ss 31 and 32 of the said Act.
4. Declare that the second respondent constituted under the provisions of Electricity Act, 2003 cannot decide or declare the veracity of the decisions taken by another statutory authority i.e., the second petitioner which is also constituted under the provisions of Electricity Act, 2003.
5. Pass such other orders as this Hon'ble Court may deem fit in the facts and circumstances of the case, and
6. Grant the cost of these proceedings.
2. Karnataka Power Transmission Corporation Limited (KPTCL) is the State Transmission Utility as defined under Section 39 of the Electricity Act, 2003 (for short, 'the Act') as also a Government Company and all its shares are held by the State of Karnataka. KPTCL is engaged in the business of transmission of electricity in the State of Karnataka. 2nd petitioner is the State Load Dispatch Centre (SLDC) for the State of Karnataka constituted under Section 31 of the Act and now operates under 1st petitioner.
3. 1st respondent - M/s.Shamanur Sugars Limited (for short, 'Shamanur') is a generating company and has -4- WP No. 46495 of 2012 established bagasse-based co-generation power plant with a capacity of 20 MWs. Shamanur had entered into a Power Purchase Agreement (PPA) on 07.03.1998 for selling surplus power of 10 to 15 MWs. The PPA was for 10 years and expired in September 2011. After expiry of PPA of the year 1998, 1st respondent had sought Standing Clearance (SC) and No-Objection Certificate (NOC) for the purpose of exporting power from its generating plant. While granting SC and NOC, the SLDC had added condition (m) which reads as under:-
"Clause (m) - for any excess generation, the rates fixed by KERC for old plants only will be paid and not as per UI rates. However, for shortfall in generation as compared to the scheduled generation, the Firm will pay UI rates"
4. It is aggrieved by the imposition of such a Clause that Shamanur initiated proceedings before the 2nd respondent-Central Electricity Regulation Commission (CERC), contending that insertion of Clause (m) is in violation of CERC (Unscheduled -5- WP No. 46495 of 2012 Inter-Change Charges and Related Matters) Regulations, 2009 (for short, 'Regulations of 2009').
5. The CERC by way of the impugned order dated 09.10.2012 in Petition No.124/MP/2011 held that the Statutory Regulations in terms of Regulations 2009 cannot be changed to an administrative instruction by insertion of Clause (m) in SC and NOC and there being a conflict between that condition and the Regulations, the Regulations would prevail. Clause
(m) was held to be in violation of the Regulations and as such, not sustainable. The SLDC was directed to align its SC/NOC for open access to inter-State transmission with the provisions of the Open Access Regulations and UI Regulations framed by the CERC as also to settle the dues of Shamanur from January 2010 onwards in accordance with Clause (5) of Regulation 20 of CERC (Open Access in Inter-State Transmission) Regulations, 2008. -6- WP No. 46495 of 2012
6. It is aggrieved by the said order dated 09.10.2012 that the KPTCL and SLDC are before this Court seeking for the aforesaid reliefs.
7. Sri.S.Sriranga, learned Senior Counsel appearing for the petitioners, submits that:
7.1. KPTCL being a State Transmission Utility as defined under Section 39 of the Act, the functions as envisaged under Section 39 (2) of the Act are being discharged by KPTCL and to discharge the duties under Section 40 of the Act thereof.
7.2. Section 39 and Section 40 of the Act are reproduced hereunder for easy reference:-
Section 39. State Transmission Utility and functions.- (1) The State Government may notify the Board or a Government company as the State Transmission Utility:
Provided that the State Transmission Utility shall not engage in the business of trading in electricity:
Provided further that the State Government may transfer, and vest any property, interest in property, rights and liabilities connected with, and personnel involved in transmission of electricity, of such State Transmission Utility, to a company or companies to be incorporated under the Companies Act, 1956 (1 of -7- WP No. 46495 of 2012 1956) to function as transmission licensee through a transfer scheme to be effected in the manner specified under Part XIII and such company or companies shall be deemed to be transmission licensees under this Act.
(2) The functions of the State Transmission Utility shall be -
(a) to undertake transmission of electricity through intra-State transmission system;
(b) to discharge all functions of planning and co-
ordination relating to intra-State transmission system with -
(i) Central Transmission Utility;
(ii) State Governments;
(iii) Generating companies;
(iv) Regional Power Committees;
(v) Authority;
(vi) Licensees;
(vii) Any other person notified by the State Government in this behalf;
(c) to ensure development of an efficient, co-ordinated and economical system of intra-State transmission lines for smooth flow of electricity from a generating station to the load centres;
(d) to provide non-discriminatory open access to its transmission system for use by-
(i) any licensee or generating company on payment of the transmission charges; or
(ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the State Commission:
Provided that such surcharge shall be utilised for the purpose of meeting the requirement of current level cross-subsidy:-8- WP No. 46495 of 2012
Provided further that such surcharge and cross subsidies shall be progressively reduced in the manner as may be specified by the State Commission:
Provided also that the manner of payment and utilisation of the surcharge shall be specified by the State Commission:
Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use.
Section 40. Duties of transmission licensees.- It shall be the duty of a transmission licensee--
(a) to build, maintain and operate an efficient, coordinated and economical inter-State transmission system or intra-State transmission system, as the case may be;
(b) to comply with the directions of the Regional Load Despatch Centre and the State Load Despatch Centre, as the case may be;
(c) to provide non-discriminatory open access to its transmission system for use by-
(i) any licensee or generating company on payment of the transmission charges; or
(ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the State Commission:
Provided that such surcharge shall be utilised for the purpose of meeting the requirement of current level cross-subsidy:
Provided further that such surcharge and cross subsidies shall be progressively reduced in the manner as may be specified by the Appropriate Commission:
Provided also that the manner of payment and utilisation of the surcharge shall be specified by the Appropriate Commission:
Provided also that such surcharge shall not be leviable in case open access is provided to a person who has -9- WP No. 46495 of 2012 established a captive generating plant for carrying the electricity to the destination of his own use.
7.3. In terms of Section 31(2) of the Act, SLDC is required to be constituted whose primary function is to ensure integrated operation of the power system in the State so as to maintain a balance of load within the State for all intra-
state transmission and it is for this reason that clause (m) was added in the SC/NOC.
7.4. Section 31 of Act is reproduced hereunder for easy reference:
Section 31. Constitution of State Load Despatch Centres. (1) The State Government shall establish a Centre to be known as the State Load Despatch Centre for the purposes of exercising the powers and discharging the functions under this Part.
(2) The State Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any State Act, as may be notified by the State Government:
Provided that until a Government company or any authority or corporation is notified by the State Government, the State Transmission Utility shall operate the State Load Despatch Centre:
Provided further that no State Load Despatch Centre shall engage in the business of trading in electricity.
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7.5. Shamanur had requested for the SC and NOC.
The SLDC being vested with the obligation to maintain proper load of electricity in the transmission lines had imposed the impugned condition Clause (m) in the NOC. This introduction of Clause (m) in the SC/NOC was in discharge of the statutory functions vested with the SLDC under Section 31 of the Act. The same is not an administrative action. The SLDC has an independent existence which cannot be interfered with by CERC.
7.6. Section 32 of the Act clearly lays down the function and responsibilities of the SLDC which reads as under:-
Section 32. Functions of State Load Despatch Centres.
(1) The State Load Despatch Centre shall be the apex body to ensure integrated operation of the power system in a State.
(2) The State Load Despatch Centre shall--
(a) be responsible for optimum scheduling and despatch of electricity within a State, in accordance with the contracts entered into with the licensees or the generating companies operating in that State;
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WP No. 46495 of 2012
(b) monitor grid operations;
(c) keep accounts of the quantity of electricity transmitted through the State grid;
(d) exercise supervision and control over the intra- State transmission system; and
(e) be responsible for carrying out real time operations for grid control and despatch of electricity within the State through secure and economic operation of the State grid in accordance with the Grid Standards and the State Grid Code.
(3) The State Load Despatch Centre may levy and collect such fee and charges from the generating companies and licensees engaged in intra-State transmission of electricity as may be specified by the State Commission.
7.7. By relying on the following decisions, he submits that SLDC is permitted to discharge its functions in terms of Section 32 of the Act and in order to discharge such functions, SLDC would have necessary powers:
7.8. Indo Rama Synthetic Ltd., vs. Maharashtra Electricity Regulatory Commission1, more particularly, Para 8, which is reproduced hereunder for easy reference:
8. Unlike other goods electricity cannot be stored and has to be consumed instantaneously. The generating 1 2011 SCC Online APTEL 77
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plants, interconnecting transmission lines and sub- stations form the grid. State grids are interconnected to form Regional Grids and interconnected regional grids form the National Grid. The SLDC prepares the generation schedule one day in advance for the intra- state generating station and drawal schedules for the distribution licensees based on the agreements between the distribution licensee and the generators/trading licensees, declared capacity by the generators and drawal schedule indicated by the distribution licensees. The generators and the licensees are expected to follow the schedule given by the SLDC in the interest of grid security and economic operation. If a generator connected to the grid injects power into the grid without a schedule, the same will be consumed in the grid even without the knowledge or consent of the distribution licensees. However, such injection of power is to be discouraged in the interest of secure and economic operation of the grid. In the present case, the expensive power was injected by the appellant without the knowledge or consent of the distribution licensee or agreement and without any schedule from SLDC. Admittedly, the appellant's power was high cost power for which none of the distribution licensees had any agreement with the appellant. Therefore, there is no substance in the contention of the appellant for compensation.
7.9. Relying on the above, he submits that since SLDC prepares the generation schedule, the independent power producer is required to generate as per the schedule. Thus, he submits that the directions which had been issued are in the interest of the grid.
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WP No. 46495 of 20127.10. Kamachi Sponge & Power Corporation Ltd., vs. Tangendco and others2 more particularly, Para (c)(1), which is reproduced hereunder for easy reference:
c. On Question No. 6 (b) i.e. Whether the first Respondent does not have any responsibility of regulation of inflow into the grid from all the suppliers as in the present case energy was supplied with the full knowledge of the First Respondent for more than 30 days?, we decide as below:
i. The sequence of events and the communications exchanged between the Appellant and the Respondent No.1 clearly establishes that the power was pumped by the Appellant from 21.10.2011 (synchronisation date of first unit of the Appellant) for which for the first time, information of such injection was received by the Respondent No. 1 only on 8.11.2011 vide Appellant's letter dated 5.11.2011 that too in response to the queries raised by the Respondent No.1. Here we would like to mention that each entity created under the Electricity Act, 2003 has a clear defined role. In Appeal No. 120 of 2016 & IA No. 272 of 2016 his case the responsibility of regulation of power inflow into the grid from all suppliers lies with SLDC in accordance with Section 32 of the Electricity Act, 2003, based on the contractual agreements entered by the distribution licensee with power generators/suppliers through a well established system of scheduling. It is the duty of everyone connected with the operation of the power system to comply with the directions of the SLDC in its control area. In the instant case, the Appellant has not sought any approval/ schedule from SLDC before synchronisation for pumping any power into the grid. Even the SLDC was not aware of the power pumped during this period by the Appellant into the grid. Hence, the onus of the wrong doing by the Appellant cannot be shifted to the Respondent No. 1.2 Appeal No.120/2016
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7.11. Relying on the above, he submits that SLDC has the power to issue directions in its controlled area and it is the duty of everyone connected with the operation of the power system to comply with such directions.
7.12. SAL STEEL VS. STATE LOAD DISPATCH CENTER3, more particularly, Para 30, which is reproduced hereunder for easy reference:
30. The moot question, therefore, arose before the Court as to whether the challenge raised by the petitioners in this petition has any substance or merits.
It also leads to the Court to decide as to whether the Court should entertain such challenge and give its finding on this issue. For this purpose, a close look is required to the relevant provisions contained in Section 33 of the Electricity Act, 2003. Part V of the Act deals with transmission of electricity. It divides into two parts. Sections 25 to 29 deals with Inter- State transmission whereas Sections 30 to 33 deals with Intra-State transmission. Section 31 deals with constitution of SLDC and Section 32 discusses about functions of SLDC. As per Sub-section (1) Section 32, SLDC was considered to be the apex body to ensure integrated operation of the power system in a State and as per Sub-section (2), it is responsible for optimum scheduling and dispatch of electricity within a State, in accordance with the contracts entered into with the licensees or the generating Companies operating in the State. It monitors grid operations, keeps accounts of the quantity of electricity transmitted through the State grid and exercises supervision and control over the Intra-State transmission system. Section 33 deals with compliance 3 2010 SCC Online Guj 3584
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WP No. 46495 of 2012of directions issued by SLDC. Sub-section (1) of Section 33 empowers the SLDC to give such directions and exercise such supervision and control as may be required for ensuring the integrated grid operations and for achieving the mechanism economy and efficiency in the operation of power system in the State. Sub-section (2) of Section 33 is very important for our purpose. It says that every licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the State Load Dispatch Centre under sub-section (1). Here in the present case, initially statement of imbalances energy accounting among Open Access users in Intra-State network for about 32 weeks was prepared in accordance with Open Access Regulations, 2005 of GERC and Open Access Regulation, 2008 of GERC. Subsequently, on representation from GUVNL and after discussion, final procedure for accounting and settlement of payment was prepared. As per this procedure, adjustment portion of Intra-State transaction is not apportioned. GUVNL as residual entity shall bear all the adjustment portion of the Intra-State transaction. The adjustment portion of Intra-State transaction which was considered in earlier bills was to be revised to the unadjusted portion. Accordingly, SLDC Gujarat has revised the imbalance energy account of 32 weeks due to submission of GUVNL executing adjustment portion of Intra-State WR transactions and all pool members were requested to settle the differential amount within 7 days. This is in exercise of powers conferred on SLDC under Section 32 of the Act and directions were issued under Section 33(1) of the Act and the petitioner No. 1 Company and all other Companies are bound to comply with these directions. It is, of course, open for the petitioners to raise any dispute under sub-section (4) of Section 33 which says that if any dispute arises with reference to the quality of electricity or safe, secure and integrated operation of the State grid or in relation to any direction given under sub-section (1), it shall be referred to the State Commission for decision. The petitioner is, therefore, having an efficacious alternative remedy to raise this dispute before the Gujarat Electricity Regulatory Commission GERC under Section 33(4) of the Act. Proviso to this sub-section is equally important which says that pending the decision of the State Commission, the directions of the SLDC shall be complied with by the licensee or generating Company. It is, therefore, obligatory on the part of the
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WP No. 46495 of 2012petitioner before raising any dispute either before the State Commission or before this Court to comply with the directions issued by the respondent No. 1. The direction is to settle the differential amount within 7 days. Since this has not been done, the question of encashment of bank guarantee arises. 7.13. Relying on the above, he submits that SLDC has the power to correct the imbalance from the energy accounts and it is in that regard that the schedules are prepared in advance which are required to be complied with by the power producers.
7.14. IN THE MATTER OF NON-COMPLIANCE OF COMMISSION'S DIRECTION AND PROVISION OF ELECTRICITY ACT, 20034 more particularly, Para 10, which is reproduced hereunder for easy reference:
10. The second issue is the liability of SLDC Punjab to carry out the functions vested in it under the Act.
SLDC Punjab has submitted that under the present dispensation, a number of functions relating to grid operation such as scheduling, despatch, UI accounting etc. are carried out by PSPCL and therefore, the respondents cannot ensure compliance of the provisions of the Grid Code and the directions of the NRLDC effectively. In our view, the reason advanced by the respondents does not absolve them of their 4 2013 SCC Online CERC 20
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WP No. 46495 of 2012basic statutory duty under the Act. Once the STU has been designated as the SLDC, the functions and responsibilities of SLDC as enshrined under the Act automatically devolve upon it. Section 32 of the Act provides that "the State Load Despatch Centre shall be the apex body to ensure integrated operation of the power system within the State". Section 32(2) of the Act further provides as under:
"(2) The State Load Despatch Centre shall-
(a) be responsible for optimum scheduling and despatch of electricity within a State, in accordance with the contracts entered into with the licensees or the generating companies operating in that State;
(b) monitor grid operations;
(c) keep accounts of the quantity of electricity transmitted through the State grid;
(d) exercise supervision and control over the intra-
State transmission system; and
(e) be responsible for carrying out real time operations for grid control and despatch of electricity within the State through secure and economic operation of the State grid in accordance with the Grid Standards and the State Grid Code.
Thus, it is the responsibility of the State Load despatch Centre to undertake all system operation functions within the State. The SLDC cannot absolve its responsibility on the plea that as per the arrangement in vogue, the distribution company is carrying out certain system operation functions. Even though it is accepted that the arrangement has been made for the smoothness of operation, the ultimate supervision and control rests with SLDC. Section 33 of the Act provides as under:
"Section 33. (Compliance of directions): (1) The State Load Despatch Centre in a State may give such directions and exercise such supervision and control as may be required for ensuring the integrated grid operations and for achieving the maximum economy and efficiency in the operation of power system in that State.
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(2) Every licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the State Load Depatch Centre under sub-section (1).
(3) The State Load Despatch Centre shall comply with the directions of the Regional Load Despatch Centre".
Thus, it is the responsibility of State Load despatch Centre to give appropriate directions and exercise supervision and control as may be required to ensure integrated grid operation and the generating company and licensee within the State are bound to comply with the directions of SLDC. Further Section 29(3) of the Act provides as under:
(3) All directions issued by the Regional Load Despatch Centres to any transmission licensee of State transmission lines or any other licensee of the State or generating company (other than those connected to inter State transmission system) or sub-station in the State shall be issued through the State Load Despatch Centre and the State Load Despatch Centres shall ensure that such directions are duly complied with the licensee or generating company or sub-station".
Therefore, the scheme of the Act is that SLDC as the independent system operator in the State shall not only ensure integrated operation of the grid but shall ensure compliance by all concerned within the State with the directions of RLDC. In our view, the Punjab SLDC is sufficiently empowered to discharge its statutory responsibility to ensure compliance with the directions NRLDC and provisions of the Grid Code by PSPCL.
7.15. By relying on the above, he submits that the SLDC is the Apex Body to ensure integrated operation of the power system within the State.
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WP No. 46495 of 20127.16. Tata Power Company Ltd., vs. Maharashtra Electricity Regulatory Commission5 more particularly Para 16, which is reproduced hereunder for easy reference:
16. Respondent no. 2 and 6 namely MSLDC and the MSETCL filed a joint written submissions contending as follows:
a) The case no. 37 of 2010 filed before the Commission was not maintainable because the Tata Power Trading Company Limited was not the petitioner in that case and was merely the respondent but the relief claimed was for Tata Power Distribution Company Limited which was not the petitioner in case no. 37 of 2010.
b) Open access was granted not to the Tata Power Company Limited but to the Tata Power Trading Company Limited. Thus, the appellant had no cause of action in case no. 37 of 2010.
c) Despite the impugned order dated 29.09.2010 being appealable the appellant deliberately filed writ petition no. 44 of 2011 before the Bombay High Court and the High Court also took the view that the order was subject to appeal before this Tribunal.
d) The appellant cannot place reliance on the order dated 18.01.2011 passed by the High Court in writ petition 13 Appeal No. 32 of 2011 no. 71 of 2011 because the Commission had no occasion to consider the judgment of the High Court.
e) In writ petition no. 71 of 2011 the appellant did not challenge the letters dated 16.05.2010 and 18.05.2010 issued by the MSLDC.
f) It was only in case no. 37 of 2010 filed before the Commission on 20.08.2010 that the letters of the 5 Appeal No.32/2011
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WP No. 46495 of 2012MSLDC dated 16.05.2010, 18.05.2010, 12.06.2010 and 30.06.2010 were challenged.
g) The appellant cannot place reliance on the order of the High Court dated 18.01.2011 passed in writ petition no.71 of 2011 and for the purpose of the present appeal the events that occurred till the decision of the Commission in case no. 37 of 2010, that is the order 29.09.2010, are required to be taken into consideration.
h) The appellant cannot pray for penalty and compensation on behalf of the Tata Power Trading Company Limited and the Tata Power Distribution Company Limited which was not a party to any proceeding in case no. 37 of 2010.
i) MSLDC is not an independent authority and was not notified under section 31 (1) of the Electricity Act and is not an autonomous body and in view of the second proviso to section 31(2) of the Act to the effect that no State Load Dispatch Centre shall engage in the business of trading in Electricity.
j) The letter of the MSLDC cannot be challenged in view of section 33 (4) of the Act.
k) Prayers for penalty and compensation made before this Tribunal are hit by section 11 of the CPC because upon due consideration the same were rejected by the Commission in its order 3.08.2010 which had attained finality.
l) The respondent no. 2 was justified in maintaining status quo because a reference was pending before the Commission.
m) The appellant suppressed material facts and did not place on record the affidavit dated 24.06.2010 filed before the MERC in case no.16 of 2010, as such the appellant has not come with clean hands.
n) On 20.05.2010 the appellant filed case no. 16 of 2010 but four prayers were not pressed and only the two prayers namely imposition of maximum penalty under section 142 and directing entitlement of the Tata Power Distribution to compensation from the respondent no.2 were retained.
o) The case 37 of 2010 was filed challenging the
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WP No. 46495 of 2012letters dated 16.05.2010, 18.05.2010, 12.06.2010 and 30.06.2010 issued by the respondent no. 2 namely MSLDC, while case no. 16 of 2010 was filed challenging the letters dated 16.05.2010 and 18.05.2010. Since the case no. 16 of 2010 was dismissed and it was not appealed against the case 37 of 2010 was not maintainable.
p) In view of no notification under section 31 of the Act having been issued the MSLDC has been operating under the instructions of the State Government and is not an independent system operator, as such the MSLDC has to abide by the directions of the State Government under section 37 of the Act.
q) The Government of Maharashtra by issuing a memorandum directed the concerned parties by following arrangements specifying therein as an interim solution to protect the interest of the consumers till the Commission would mandate any other interim solution.
r) The memorandum dated 19.05.2010 issued by the Government of Maharashtra was a clear direction to the respondent no. 2 under section 37 of the Act.
s) The statement of the learned Advocate General before the High Court to the effect that the memorandum dated 7.05.2010 was not the order under section 11 is required to be considered by minutely perusing the contents of the said memorandum coupled with the provisions of the Electricity Act, 2003. The two memoranda dated 7,05.2010 and dated 19.05.2010 read together make it clear that the Government of Maharashtra was exercising power under section 37 of the Act. 7.17. By relying on the above, he submits that the instructions of SLDC cannot be challenged in view of Section 33 (4) of the Act.
7.18. Some of the responsibilities of the SLDC being to enter into licensees, monitor the grid
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WP No. 46495 of 2012operations, account for electricity transmitted through the State grid, supervision and control over the intra-state transmission system and carry out real-time operations for the State grid.
7.19. In support thereof, he relies on the Definition of 'Control and Supervision' as per Ramanatha Aiyar's, The Law Lexicon, which reads as follows:
Control. (As a noun) Power to check or restrain; superintendence; management (As a verb) To restrain; to check; to regulate; to govern; to keep under check; to hold in restraint; to dominate; to rule and direct; to counteract; to exercise a directing, restraining or governing influence over; to govern with reference thereto; to subject to authority; to have under command, and authority over, to have authority over the particular matter.
Supervision. "Immediate supervision" means that the supervision cannot be delegated; the words to not necessarily mean that supervision must be constant and unremitting for the amount of supervision must be constant and unremitting for the nature of work.
7.20. He refers to Section 33 of the Act which reads under:-
Section 33. Compliance of directions.
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(1) The State Load Despatch Centre in a State may give such directions and exercise such supervision and control as may be required for ensuring the integrated grid operations and for achieving the maximum economy and efficiency in the operation of power system in that State.
(2) Every licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the State Load Despatch Centre under sub-section (1).
(3) The State Load Despatch Centre shall comply with the directions of the Regional Load Despatch Centre.
(4) If any dispute arises with reference to the quality of electricity or safe, secure and integrated operation of the State grid or in relation to any direction given under sub-section (1), it shall be referred to the State Commission for decision:
Provided that pending the decision of the State Commission, the directions of the State Load Despatch Centre shall be complied with by the licensee or generating company.
(5) If any licensee, generating company or any other person fails to comply with the directions issued under sub-section (1), he shall be liable to a penalty not exceeding rupees five lacs.
7.21. By referring to the above, he submits that the SLDC has been formed to give necessary directions and exercise such supervision and control for ensuring integrated grid operation so as to achieve maximum economy and efficiency in the operation of the power system in the State.
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WP No. 46495 of 20127.22. The submission is that this statutory responsibility and functions of the SLDC are now sought to be curtailed by CERC in exercise of powers under Section 79 of the Act. 7.23. In support thereof, he relies on the decision in the case of Godawari Power & Ispat Limited vs. Chhatisgarh State Load Despatch Centre6 more particularly, Para 11.5 thereof, which is reproduced hereunder for easy reference:
11.5 The State Commission in exercise of its powers under Section 86(1) (h) read with Section 181(ZP) of the Electricity Act, 2003 has notified the State Electricity Grid Code, 2011 to be applicable throughout the State of Chhattisgarh. All the entities specified under the Grid Code are bound by the provisions of the same. The primary objective of the Grid Code is to achieve the integrated operation of the State Grid Code so as to enhance the overall operation and reliability of the entire electrical network spread over all parts of the State. The SLDC is the Statutory Body created under the Act and Section 32 of the Act mandates that the SLDC shall be an apex body to ensure integrated operations of the State Grid and grid discipline among all the entities so as to make the State Grid fully safe and secure.6 Appeal No.7/2016
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WP No. 46495 of 20127.24. By relying on the above, he submits that SLDC is the Apex Body to ensure integrated operation of the State grid and maintain grid discipline among all entities. As such, the direction issued by SLDC has to be followed by everyone. 7.25. Tata Power Company Ltd., vs. Maharashtra Electricity Regulatory Commission and others7 more particularly Paras 9, 25 and 77 thereof, which are reproduced hereunder for easy reference:
9. All these three questions invoke a common issue which is as follows:--
"Whether the Appellant is entitled to the grant of compensation due to the default or misfeasance committed by the State Load Despatch Centre by illegally refusing to schedule power to the Appellant in the facts and circumstances of the case?
25. The crux of the findings as rendered to above is as follows:-
i. The SLDC maintained a stand that it was a subordinate authority of the Government and the submission of the Advocate General that it was not a direction, but it is only a suggestion was merely a concession and the same has been authorised by 7 Appeal No.175/2012
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the law. Therefore, the concession given by the Advocate General as a Counsel would not bind the SLDC. This stand taken by the SLDC is thoroughly against law and thoroughly unacceptable.
ii. When the Government through the Advocate General made its position clear that it was not direction and when the stand of the Government was recorded by the High Court in the order passed on 11.6.2010 there was no justification on the part of the SLDC to say that the said directions and the Government Memorandums should be treated as directions and as such they would go on refusing scheduling.
iii. In the light of the submission of the Advocate General appearing on behalf of the State Government that too through affidavit filed by the Government, the High Court did not think it fit to give any interim order on the petition of the Appellant. The very same thing was recorded in its order dated 11.6.2010 to the effect that the Government did not exercise its power under Section 11 and 37 of the Act. Therefore, it can not be said that the Advocate General made such submission without being instructed by the Government nor contended that the submission of the Advocate General was simply a concession against the law.
iv. Once the Government took a stand before the High Court that the Government's two memorandums were simply suggestions, the deferment of scheduling the power was a necessity, lost its force.
v. Even before this Tribunal SLDC which claims itself as subordinate authority to the Government has not been supported by the State Government in this Appeal even though the State Government is party Respondent in this Appeal.
77. Summary of the findings:-
1. The consistent stand taken by the SLDC before this Tribunal that since SLDC is the part of the
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State Transmission Company which in turn is an arm of Government of Maharashtra, it was bound to obey the directions given by the State Government in the memorandums dated 7.5.2010 and 19.5.2010 even after those Memorandums had been quashed by the High Court orders dated 18.1.2011. The SLDC continued to take the very same stand even after this Tribunal quashed the refusal letter issued by SLDC and held in Appeal No.32 of 2011 dated 30.5.2011 that SLOG is an independent autonomous body. It is therefore clear that the SLDC denied the Appellant's request for scheduling of power on considerations that are totally extraneous to the statute.
2. The present dispute deals with the period subsequent to the High Court's order quashing of the Government memorandums. Therefore, the Government Memorandums can no longer be relied upon by the SLDC to justify its non- scheduling of Appellant's power. In all its pleadings before this Tribunal, the SLDC in order to justify its non-scheduling, continued to rely upon the Government memorandums even though there are nonest in the eye of law after the order of High Court dated 18.1.2011.
3. This conduct on the part of the State Load Despatch Centre which is public office cannot be said to be bona-fide and genuine. When SLDC has got the knowledge that they cannot rely upon the Government memorandums on the basis of which the earlier order passed by the State Commission on 29.9.2010 after they were quashed, even then they refused to schedule power to the Appellant as requested by the Appellant, would show the malafide attitude of SLDC and due to that the Appellant suffered a loss. Therefore, we are of the view that since misfeasance by the SLDC with its knowledge has been established, the Appellant is entitled to claim for compensation from SLDC.
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7.26. By relying on the above, he submits that SLDC being the independent authority, the contention that SLDC acts under the directions of the State Government is liable to be rejected. Thus, he submits that there is a duty cast upon the SLDC to act independently, which it has done. The directions issued would therefore have to be complied with.
7.27. Section 79 of the Act which reads as under:-
Section 79. Functions of Central Commission. - (1) The Central Commission shall discharge the following functions, namely:--
(a) to regulate the tariff of generating companies owned or controlled by the Central Government;
(b) to regulate the tariff of generating companies other than those owned or controlled by the Central Government specified in clause (a), if such generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State;
(c) to regulate the inter-State transmission of electricity;
(d) to determine tariff for inter-State transmission of electricity;
(e) to issue licences to persons to function as transmission licensee and electricity trader with respect to their inter-State operations;
(f) to adjudicate upon disputes involving generating companies or transmission licensee in regard to
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matters connected with clauses (a) to (d) above and to refer any dispute for arbitration;
(g) to levy fees for the purposes of this Act;
(h) to specify Grid Code having regard to Grid Standards;
(i) to specify and enforce the standards with respect to quality, continuity and reliability of service by licensees;
(j) to fix the trading margin in the inter-State trading of electricity, if considered, necessary;
(k) to discharge such other functions as may be assigned under this Act.
(2) The Central Commission shall advise the Central Government on all or any of the following matters, namely:--
(i) formulation of National electricity Policy and tariff policy;
(ii) promotion of competition, efficiency and economy in activities of the electricity industry;
(iii) promotion of investment in electricity industry;
(iv) any other matter referred to the Central Commission by that Government.
(3) The Central Commission shall ensure transparency while exercising its powers and discharging its functions.
(4) In discharge of its functions, the Central Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.
7.28. Section 178 of the Act confers powers on CERC to frame regulations. It is in furtherance of the same that CERC (Open Access in Inter-State
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WP No. 46495 of 2012Transmissions) Regulations 2008 (for short, 'Regulations 2008') and CERC (Unscheduled Interchange Charges and Related Matters) Regulations 2009 (for short, 'Regulations 2009') have been framed. These Regulations being sub-ordinate legislations formulated by CERC under Section 178 of the Act, the same cannot interfere with the primary statutory functions of the SLDC under Sections 31 to 33 of the Act. 7.29. Relying on the following judgments, he submits that an alternative remedy under Section 178 would not be applicable inasmuch as a challenge to the Regulation lies only to the Constitutional Court and this Court would have to exercise jurisdiction.
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WP No. 46495 of 20127.30. Hukam Chand vs. Union of India8 more particularly Para 8 thereof, which is reproduced hereunder for easy reference:
8. Perusal of Section 40 shows that although the power of making rules to carry out the purposes of the Act has been conferred upon the Central Government, there is no provision in the section which may either expressly or by necessary implication show that the Central Government has been vested with power to make rules with retrospective effect. As it is Section 40 of the Act which empowers the Central Government to make rules, the rules would have to conform to that section. The extent and amplitude of the rule-making power would depend upon and be governed by the language of the section. If a particular rule were not to fall within the ambit and purview of the section, the Central Government in such an event would have no power to make that rule. Likewise, if there was nothing in the language of Section 40 to empower the Central Government either expressly or by necessary implication, to make a rule retroactively, the Central Government would be acting in excess of its power if it gave retrospective effect to any rule. The underlying principle is that unlike Sovereign Legislature which has power to enact laws with retrospective operation, authority vested with the power of making subordinate legislation has to act within the limits of its power and cannot transgress the same. The initial difference between subordinate legislation and the statute laws lies in the fact that a subordinate law-making body is bound by the terms of its delegated or derived authority and that Court of law, as a general rule, will not give effect to the rules, thus made, unless satisfied that all the conditions precedent to the validity of the rules have been fulfilled (see Craies on Statute Law, p. 297, Sixth Edn.).
8 (1972) 2 SCC 601
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WP No. 46495 of 20127.31. Agricultural Market Committee vs. Shalimar Chemical Works Ltd.,9 more particularly Para 24, which is reproduced hereunder for easy reference:
24. The power of delegation is a constituent element of the legislative power as a whole under Article 245 of the Constitution and other relative articles and when the legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by the Acts as part of the Administrative Law. The legislature has to lay down the legislative policy and principle to afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. (See:
Vasantal Maganbhai Sanjanwala v. State of Bombay. This Court in another case, namely, Municipal Corpn. of Delhi v. Birla Cotton, Spg. and Wvg. Mills as also in an earlier decision in Delhi Laws Act, 1912, In re has laid down the principle that the legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act concerned.
7.32. Petroleum and Natural Gas Regulatory Board vs. Indraprasth Gas Ltd.,10 more particularly Para 53, which is reproduced hereunder for easy reference:
9
(1997) 5 SCC 516 10 (2015) 9 SCC 209
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53. In the case at hand, the Board has not been conferred such a power as per Section 11 of the Act. That is the legislative intent. Section 61 enables the Board to frame Regulations to carry out the purposes of the Act and certain specific aspects have been mentioned therein. Section 61 has to be read in the context of the statutory scheme. The regulatory provisions, needless to say, are to be read and applied keeping in view the nature and textual context of the enactment as that is the source of power. On a scanning of the entire Act and applying various principles, we find that the Act does not confer any such power on the Board and the expression "subject to" used in Section 22 makes it a conditional one. It has to yield to other provisions of the Act. The power to fix the tariff has not been given to the Board. In view of that the Board cannot frame a Regulation which will cover the area pertaining to determination of network tariff for city or local gas distribution network and compression charge for CNG. As the entire Regulation centres around the said subject, the said Regulation deserves to be declared ultra vires, and we do so.
7.33. Power Machines India Ltd., vs. State of Madhya Pradesh and ors11 more particularly Para 25, which is reproduced hereunder for easy reference:
25. This Court has laid down that the legislature has to lay down the legislative policy to delegate for carrying out the said policy. What can be delegated is the task of the subordinate legislation necessary for implementing the purposes and objects of the Act. In the instant case, by exercising the rule-making power conferred under Section 30, the purpose of the 2006 Act is being protected. The rule intends to implement the object. It cannot be said that authority has been exceeded nor can it be said that the scope of the Act 11 (2017) 7 SCC 323
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has been widened or constricted under the garb of rule-making power. Object of both the provisions is to ensure recovery.
7.34. Bhuwalka Steel Industries Ltd., vs. Union of India12 more particularly Paras 35 and 37 thereof, which are reproduced hereunder for easy reference:
35. However, the question in this case is -- Whether Section 3-A(2) and/or Rule 5 really create fictions? To understand the same, the context and purpose of Section 3-A and Rule 5 is required to be examined.
The scheme and purpose of Section 3-A is already examined in paras 4 to 7. Rule 5 stipulated that if the ACP determined in accordance with the preceding four rules is less than the actual production of a particular assessee for the Financial Year 1996-97, the authority determining the ACP is required to abandon the figure of ACP arrived at by employing the procedure contained in Rules 1 to 4 and adopt the actual production achieved by the assessee for the Financial Year 1996-97 [ The relevance of the Financial Year 1996-97 in the context of the Rules is that the Rules are made and brought into force with effect from 1-8- 1997. Financial Year 1996-97 is the Financial Year immediately preceding the making of the 1997 Rules.] to be the ACP of that assessee.
37. In our opinion, Section 3-A(2) only embodies a rule of evidence which commands the department to presume certain facts. Such presumptions are not unknown to law. Section 114 of the Evidence Act, 1872 enacts a rule of evidence which requires a court to presume the existence of any fact which the court thinks likely to have happened regard being had to common course of natural events, etc. The presumption created under Rule 5 is similar to the one contained in Illustration (d) [ "(d) that a thing or state of things which has been shown to be in existence 12 (2017) 5 SCC 598
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WP No. 46495 of 2012within a period shorter than that within which such things or state of things usually cease to exist, is still in existence;"] to Section 114 of the Evidence Act. 7.35. PTC India Ltd., vs. Central Electricity Regulatory Commission13 more particularly Paras 92 and 93, which are reproduced hereunder for easy reference:
92. (i) In the hierarchy of regulatory powers and functions under the 2003 Act, Section 178, which deals with making of regulations by the Central Commission, under the authority of subordinate legislation, is wider than Section 79(1) of the 2003 Act, which enumerates the regulatory functions of the Central Commission, in specified areas, to be discharged by orders (decisions).
(ii) A regulation under Section 178, as a part of regulatory framework, intervenes and even overrides the existing contracts between the regulated entities inasmuch as it casts a statutory obligation on the regulated entities to align their existing and future contracts with the said regulation.
(iii) A regulation under Section 178 is made under the authority of delegated legislation and consequently its validity can be tested only in judicial review proceedings before the courts and not by way of appeal before the Appellate Tribunal for Electricity under Section 111 of the said Act.
(iv) Section 121 of the 2003 Act does not confer power of judicial review on the Appellate Tribunal. The words "orders", "instructions" or "directions" in Section 121 do not confer power of judicial review in the Appellate Tribunal for Electricity. In this judgment, we do not wish to analyse the English authorities as we find from those authorities that in certain cases in England the power of judicial review is expressly conferred on the 13 (2010) 4 SCC 603
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WP No. 46495 of 2012tribunals constituted under the Act. In the present 2003 Act, the power of judicial review of the validity of the regulations made under Section 178 is not conferred on the Appellate Tribunal for Electricity.
(v) If a dispute arises in adjudication on interpretation of a regulation made under Section 178, an appeal would certainly lie before the Appellate Tribunal under Section 111, however, no appeal to the Appellate Tribunal shall lie on the validity of a regulation made under Section 178.
(vi) Applying the principle of "generality versus enumeration", it would be open to the Central Commission to make a regulation on any residuary item under Section 178(1) read with Section 178(2)(ze). Accordingly, we hold that CERC was empowered to cap the trading margin under the authority of delegated legislation under Section 178 vide the impugned Notification dated 23-1-2006.
(vii) Section 121, as amended by the Electricity (Amendment) Act 57 of 2003, came into force with effect from 27-1-2004. Consequently, there is no merit in the contention advanced that the said section has not yet been brought into force.
93. For the aforesaid reasons, we answer the question raised in the reference as follows:
The Appellate Tribunal for Electricity has no jurisdiction to decide the validity of the Regulations framed by the Central Electricity Regulatory Commission under Section 178 of the Electricity Act, 2003. The validity of the Regulations may, however, be challenged by seeking judicial review under Article 226 of the Constitution of India.
7.36. The duties of SLDC having been specifically demarcated under Sections 31 to 33, the Regulations of 2008 and Regulations of 2009 have the effect of controlling and regulating the activities of SLDC which cannot be done. The
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CERC has no powers to frame Regulations with respect to any of the activities under Sections 31 to 33 of the Act. By framing such Regulations which violates Section 31 to 33 of Act, CERC has transgressed the provisions of the Act impinging upon the statutory powers and duties vested in the SLDC under Sections 32 and 33 of the Act, thereby usurping the powers vested with the SLDC. He submits that merely because the transmission line is a inter- state line, Section 33 of the Act will not become inoperable and CERC would not get exclusive jurisdiction over the intra-state line and thereby the State grid.
7.37. Relying on the decision in the case of R.K.Mittal & Ors., vs. State of Uttar Pradesh and Ors14 more particularly Para 26, which is reproduced hereunder for easy 14 AIR 2012 SC 389
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WP No. 46495 of 2012reference, he submits that Regulations are to be subordinate to the provisions of the Act inasmuch as Regulations are to be subordinate to Sections 31 to 33 of the Act.
26. It has to be noticed at this stage that the development plan prepared in accordance with the Regulations take the statutory colour in terms of Section 6(2)(b) of the Act and, therefore, its alteration by an executive order would be impermissible. Even when a Master Plan is to be amended, the entire prescribed procedure must be followed. The power to amend should be exercised only in consonance with the settled norms without going beyond the original power of the Development Authority to make such plan in accordance with the provisions of the Act. The power to amend cannot be used to frustrate the provisions of the statute. Regulations, being subordinate legislation must fall in line with the principal provisions of the Act and in no way should be detrimental to the provisions and the legislative scheme of the Act.
7.38. He submits that there needs to be a harmonious construction and consideration of the Act so as to achieve the objective thereof, with each entity discharging its obligations and no entity stepping on or usurping the jurisdiction of another entity. In this regard, he relies upon the following decisions:
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WP No. 46495 of 2012 7.39. Kurmanchal Institute of Degree and Diploma and Others vs. Chancellor
M.J.P.Rohilkhand University and Others15 more particularly Para 20, which is reproduced hereunder for easy reference:
20. The submission of the learned counsel that the UGC Regulations, 1985 provide for study centres of this nature cannot be countenanced. The UGC Regulations being a subordinate legislation must be read with the principal Act. The subordinate legislation will be ultra vires if it contravenes the provisions of the principal Act. (See Vasu Dev Singh v. Union of India).
A statutory authority, it is well known, must act within the four corners of the statute. A fortiori it has to operate within the boundaries of the territories within which it is to operate under the statute. Such territorial jurisdiction of the university must be maintained as otherwise chaos would be created. If distance education of such a nature is to be encouraged, the only course would be to suitably amend the provisions of the Act.
7.40. Vikramaditya Pandey vs. Industrial Tribunal, Lucknow and another16 more particularly Para 6, which is reproduced hereunder for easy reference:
6. We have carefully considered the respective contentions made on behalf of the parties. It is not in 15 (2007) 6 SCC 35 16 (2001) 2 SCC 423
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dispute that the award passed by the Tribunal was not challenged by the Bank. The Tribunal as well as the High Court have concurrently found that the case of the appellant was one of retrenchment and that the appellant was working between the period 4-12-1981 to 19-7-1985 with small motivated breaks and that in any case he worked for more than 240 days in a year before termination of services. The Tribunal in para 5 of its award has stated thus:
"It is however evident that he worked for much more than 240 days in an year before his service ceased. It is also clear that breaks were given and ad hoc appointment was made every time for 90 days or less. This was evidently done to stick to the letter of the law regarding the authority of the Bank in regard to making appointments only for limited periods in ad hoc or temporary arrangement, as specified in the Service Regulations 1975. It is however, clear that services of the workman were needed as the work was available but a continuing temporary appointment was not made even though under Regulation 5(iii) of the Service Regulations such longer term stopgap appointment (and not only for 90 days) can be made with prior approval of the competent authority (the Board). It would thus, appear that attempt was made conforming to the letter of law and not its spirit insofar as provisions regarding retrenchment under the Industrial Disputes Act go."
The only issue before the High Court was whether the appellant was entitled to reinstatement in service with back wages, once the termination of his services had been held to be illegal and more so when the same was not challenged. Ordinarily, once the termination of service of an employee is held to be wrongful or illegal the normal relief of reinstatement with full back wages shall be available to an employee; it is open to the employer to specifically plead and establish that there were special circumstances which warranted either non-reinstatement or non-payment of back wages. In this case we do not find any such pleading of special circumstances either before the Tribunal or before the High Court. Since Regulation 103 of the Regulations is referred to in the order of the Tribunal as well as in the High Court and it has bearing in deciding the controversy, the focus is needed on it. It reads:
"103. The provisions of these Regulations to the extent of their inconsistency with any of the provisions of the Industrial Disputes Act, 1947, U.P. Dookan Aur Vanijya
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Adhishthan Adhiniyam, 1962, Workmen's Compensation Act, 1923 and any other labour laws for the time being in force, if applicable to any cooperative society or class of cooperative societies, shall be deemed to be inoperative."
By a plain reading of the said Regulation it is clear that in case of inconsistency between the Regulations and the provisions of the Industrial Disputes Act, 1947, the State Act, the Workmen's Compensation Act, 1923 and any other labour laws for the time being in force, if applicable to any cooperative society or class of cooperative societies, to that extent the Regulations shall be deemed to be inoperative. In other words, the inconsistent provisions contained in the Regulations shall be inoperative, not the provisions of the other statutes mentioned in Regulation 103. The Tribunal in this regard correctly understood the regulation but wrongly refused the relief on the ground that no reinstatement can be ordered on a regular employment in view of the provisions contained in the said Regulation. But the High Court read the regulation otherwise and plainly misunderstood it in saying that if there is any inconsistency between the Regulations and the Industrial Disputes Act, 1947 and other labour laws for the time being in force the Regulations will prevail and the Industrial Disputes Act, 1947 and other labour laws shall be deemed to be inoperative. This misreading and wrong approach of the High Court resulted in the wrong conclusion. In the view it took as regards Regulation 103 the High Court proceeded to state that even if there was retrenchment in view of Regulation 5 of the Regulations the Labour Court was not competent to direct reinstatement of the appellant who was not recruited in terms of Regulation 5 because the Labour Court had to act within the ambit of law having regard to the Regulations by which the workman was governed. In this view the High Court declined relief to the appellant which in our view cannot be sustained. The Tribunal felt difficulty in ordering reinstatement as the appellant was not a regular employee. The appellant ought to have been ordered to be reinstated in service once it was found that his services were illegally terminated in the post he was holding including its nature. Thus in our opinion both the Tribunal as well as the High Court were not right and justified on facts and in law in refusing the relief of reinstatement of the appellant in service with back wages. But, however, having regard to the facts and circumstances of the case and taking
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WP No. 46495 of 2012note of the fact that the order of termination dates back to 19-7-1985 we think it just and appropriate in the interest of justice to grant back wages only to the extent of 50%.
7.41. Krishan Kumar vs. State of Rajasthan and others17 more particularly Para 11, which is reproduced hereunder for easy reference:
11. It is settled principle of interpretation that where there appears to be inconsistency in two sections of the same Act, the principle of harmonious construction should be followed in avoiding a head on clash. It should not be lightly assumed that what the Parliament has given with one hand, it took away with the other. The provisions of one section of statute cannot be used to defeat those of another unless it is impossible to reconcile the same. In Venkataramana Devaru v. State of Mysore [AIR 1958 SC 255, 268 :
1958 SCR 895] , this Court observed: (AIR p. 268) "The rule of construction is well settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is what is known as the rule of harmonious construction."
The essence of harmonious construction is to give effect to both the provisions. Bearing these principles in mind it is legitimate to hold that Section 100(4) prescribed period of limitation of one year in respect of the scheme proposed under the provisions of the new Act, while in the case of a scheme under Section 68-C of the old Act, pending on the date of enforcement of the new Act, namely, July 1, 1989, the period of one year as prescribed under Section 100(4) should be computed from the date of commencement of the new Act. This interpretation would give full effect to both the sections -- Section 100(4) and Section 217(2)(e) of the new Act.17
(1991) 4 SCC 258
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7.42. Sri.Venkatrama Devaru and Others vs. State of Mysore and Others18 more particularly Para 29, which is reproduced hereunder for easy reference:
29. The result then is that there are two provisions of equal authority, neither of them being subject to the other. The question is how the apparent conflict between them is to be resolved. The rule of construction is well settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect could be given to both. This is what is known as the rule of harmonious construction.
Applying this rule, if the contention of the appellants is to be accepted, then Article 25(2)(b) will become wholly nugatory in its application to denominational temples, though, as stated above, the language of that Article includes them. On the other hand, if the contention of the respondents is accepted, then full effect can be given to Article 26(b) in all matters of religion, subject only to this that as regards one aspect of them, entry into a temple for worship, the rights declared under Article 25(2)(b) will prevail. While, in the former case, Article 25(2)(b) will be put wholly out of operation, in the latter, effect can be given to both that provision and Article 26(b). We must accordingly hold that Article 26(b) must be read subject to Article 25(2)(b).
7.43. He submits that the very same grounds, which are available for a challenge to a Statute would also be available for a challenge to a regulation and in this regard, he relies upon the decision 18 AIR 1958 SC 255
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WP No. 46495 of 2012in the case of State of A.P. and others vs. McDowell & Co. and others19 more particularly Para 43, which is reproduced hereunder for easy reference:
43. Shri Rohinton Nariman submitted that inasmuch as a large number of persons falling within the exempted categories are allowed to consume intoxicating liquors in the State of Andhra Pradesh, the total prohibition of manufacture and production of these liquors is 'arbitrary' and the amending Act is liable to be struck down on this ground alone. Support for this proposition is sought from a judgment of this Court in State of T.N. v. Ananthi Ammal [(1995) 1 SCC 519] . Before, however, we refer to the holding in the said decision, it would be appropriate to remind ourselves of certain basic propositions in this behalf. In the United Kingdom, Parliament is supreme. There are no limitations upon the power of Parliament. No court in the United Kingdom can strike down an Act made by Parliament on any ground. As against this, the United States of America has a Federal Constitution where the power of the Congress and the State Legislatures to make laws is limited in two ways, viz., the division of legislative powers between the States and the Federal Government and the fundamental rights (Bill of Rights) incorporated in the Constitution. In India, the position is similar to the United States of America. The power of Parliament or for that matter, the State Legislatures is restricted in two ways. A law made by Parliament or the legislature can be struck down by courts on two grounds and two grounds alone, viz., (1) lack of legislative competence and (2) violation of any of the fundamental rights guaranteed in Part III of the Constitution or of any other constitutional provision.
There is no third ground. We do not wish to enter into a discussion of the concepts of procedural unreasonableness and substantive unreasonableness
-- concepts inspired by the decisions of United States Supreme Court. Even in U.S.A., these concepts and in particular the concept of substantive due process have 19 (1996) 3 SCC 709
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WP No. 46495 of 2012proved to be of unending controversy, the latest thinking tending towards a severe curtailment of this ground (substantive due process). The main criticism against the ground of substantive due process being that it seeks to set up the courts as arbiters of the wisdom of the legislature in enacting the particular piece of legislation. It is enough for us to say that by whatever name it is characterised, the ground of invalidation must fall within the four corners of the two grounds mentioned above. In other words, say, if an enactment is challenged as violative of Article 14, it can be struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary [ An expression used widely and rather indiscriminately -- an expression of inherently imprecise import. The extensive use of this expression in India reminds one of what Frankfurter, J. said in Hattie Mae Tiller v. Atlantic Coast Line Railroad Co., 87 L Ed 610 : 318 US 54 (1943). "The phrase begins life as a literary expression; its felicity leads to its lazy repetition and repetition soon establishes it as a legal formula, undiscriminatingly used to express different and sometimes contradictory ideas", said the learned Judge.] or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. An enactment cannot be struck down on the ground that court thinks it unjustified. Parliament and the legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom. In this connection, it should be remembered that even in the case of administrative action, the scope of judicial review is limited to three grounds, viz., (i) unreasonableness, which can more appropriately be called irrationality,
(ii) illegality and (iii) procedural impropriety (see Council of Civil Service Unions v. Minister for Civil Service [1985 AC 374 : (1984) 3 All ER 935 : (1984) 3 WLR 1174] which decision has been accepted by this Court as well). The applicability of doctrine of proportionality even in administrative law sphere is yet a debatable issue. (See the opinions of Lords Lowry and Ackner in R. v. Secy. of State for Home Deptt., ex
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WP No. 46495 of 2012p Brind [1991 AC 696 : (1991) 1 All ER 720] AC at 766-67 and 762.) It would be rather odd if an enactment were to be struck down by applying the said principle when its applicability even in administrative law sphere is not fully and finally settled. It is one thing to say that a restriction imposed upon a fundamental right can be struck down if it is disproportionate, excessive or unreasonable and quite another thing to say that the court can strike down enactment if it thinks it unreasonable, unnecessary or unwarranted. Now, coming to the decision in Ananthi Ammal [(1995) 1 SCC 519] , we are of the opinion that it does not lay down a different proposition. It was an appeal from the decision of the Madras High Court striking down the Tamil Nadu Acquisition of Land for Harijan Welfare Schemes Act, 1978 as violative of Articles 14, 19 and 300-A of the Constitution. On a review of the provisions of the Actthis Court found that it provided a procedure which was substantially unfair to the owners of the land as compared to the procedure prescribed by the Land Acquisition Act, 1894, insofar as Section 11 of the Act provided for payment of compensation in instalments if it exceeded rupees two thousand. After noticing the several features of the Act including the one mentioned above, this Court observed: (SCC p. 526, para 7) "7. When a statute is impugned under Article 14 what the court has to decide is whether the statute is so arbitrary or unreasonable that it must be struck down. At best, a statute upon a similar subject which derives its authority from another source can be referred to, if its provisions have been held to be reasonable or have stood the test of time, only for the purpose of indicating what may be said to be reasonable in the context. We proceed to examine the provisions of the said Act upon this basis."
7.44. Both the petitioners and respondent No.2 being the statutory functionaries constituted under the Act, one authority cannot impinge on the functions of another authority that to by way of
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WP No. 46495 of 2012a sub-ordinate legislation. If at all the respondents had any grievance against the petitioners, the same would come within the purview of KERC and not the CERC. The dispute ought to have been raised before the KERC. The CERC ought to have taken this fact into account and dismissed the proceedings on account of lack of jurisdiction.
7.45. Another reason why the CERC would not have jurisdiction is that the respondent has invoked Section 79 (1)(f) of the Act read with Regulation 26 of Regulation 2008 whereunder the only dispute between the generating companies or transmission licensee as regards the matters covered under 79(1)(a) to (d) of the Act could be raised. The imposition of UI charges by the SLDC does not fall within the ambit of 79(1)(a) to (d) of the Act and as such,
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WP No. 46495 of 2012CERC would not have jurisdiction under Section 79(1)(f) of the Act.
7.46. Section 79 is reproduced hereunder for easy reference:-
79. Functions of Central Commission. (1) The Central Commission shall discharge the following functions, namely:--
(a) to regulate the tariff of generating companies owned or controlled by the Central Government;
(b) to regulate the tariff of generating companies other than those owned or controlled by the Central Government specified in clause (a), if such generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State;
(c) to regulate the inter-State transmission of electricity;
(d) to determine tariff for inter-State transmission of electricity;
(e) to issue licences to persons to function as transmission licensee and electricity trader with respect to their inter-State operations;
(f) to adjudicate upon disputes involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) above and to refer any dispute for arbitration;
(g) to levy fees for the purposes of this Act;
(h) to specify Grid Code having regard to Grid Standards;
(i) to specify and enforce the standards with respect to quality, continuity and reliability of service by licensees;
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(j) to fix the trading margin in the inter-State trading of electricity, if considered, necessary;
(k) to discharge such other functions as may be assigned under this Act.
(2) The Central Commission shall advise the Central Government on all or any of the following matters, namely:--
(i) formulation of National electricity Policy and tariff policy;
(ii) promotion of competition, efficiency and economy in activities of the electricity industry;
(iii) promotion of investment in electricity industry;
(iv) any other matter referred to the Central Commission by that Government.
(3) The Central Commission shall ensure transparency while exercising its powers and discharging its functions.
(4) In discharge of its functions, the Central Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.
7.47. 2nd petitioner - SLDC is neither generating company nor a transmission licensee. The duties of SLDC are statutory in nature vested with the obligation to see that the load on the State grid is maintained properly and as such, SLDC would not come within the purview of Section 79(1)(f) of the Act. SLDC being a
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WP No. 46495 of 2012statutory authority, CERC cannot sit in an appeal over decisions of SLDC and adjudicate the correctness or otherwise of such decisions and on this ground, he submits that CERC could not have set aside the imposition of clause (m) in SC/NOC.
7.48. Clause (m) was required to be introduced in order to prevent gaming activities resorted to by power producers like Shamanur. Since the power generators who have provided with open access had to adhere to the schedule of generation fixed for the generators and the consumption of electricity by the intended consumer. This schedule is fixed by SLDC taking into account several factors, which would indicate the quantum of generation of electricity to be made at different timelines as also the pattern of consumption. By misusing the mismatch between the generation
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WP No. 46495 of 2012consumption, power producer like Shamanur is seeking to achieve compensation by abusing the UI mechanism and creating an artificial mismatch between the generations and consumption that is to say by reducing production at a particular point of time, an artificial need for power is created. When the requirement increases, and it is at that stage that the power is produced to avail of additional benefit by the power producer.
7.49. He refers to CERC (Unscheduled Interchange and Related Matter) Regulations of 2009 more particularly Regulation 2 (ee) and submits that gaming is recognized mode which is not beneficial to the customers and/or the grid. 7.50. Regulation 2 (ee) is reproduced hereunder for easy reference:-
"(ee) 'gaming' in relation to these regulations, shall mean an intentional mis-declaration of declared capacity by any generating station or seller in order to
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make an undue commercial gain through Unscheduled Interchange charges."
7.51. By misusing the above position, power generators are known to stop generation while consumer will be drawing power from the grid, when the UI penalty or charges less and when the UI charges are more, a generator will generate beyond the schedule financial gain. Both these methodologies used by generators having adverse impact on the grid, clause (m) was introduced to prevent such misuse of the grid. On the basis of the above, he submits that the Writ Petition is required to be allowed and the relief sought for is to be granted.
8. Per contra, Sri.Shridhar Prabhu, learned counsel for respondent No.1 would submit that:
8.1. SLDC or KPTCL did not challenge the jurisdiction of CERC when the dispute was brought about by Shamanur before CERC. It is
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only after a decision was passed against them that they have approached this Court challenging the jurisdiction of CERC. An issue of jurisdiction ought to have been raised at the initial stage itself and not during the course of challenge.
8.2. The KPTCL and SLDC have an alternative and efficacious remedy of an appeal to the Appellate Tribunal for Electricity under Section 111 of the Act.
8.3. The said Section 111 of the Electricity Act is reproduced hereunder for easy reference:-
Section 111. Appeal to Appellate Tribunal. - (1) Any person aggrieved by an order made by an adjudicating officer under this Act (except under section 127) or an order made by the Appropriate Commission under this Act may prefer an appeal to the Appellate Tribunal for Electricity:
Provided that any person appealing against the order of the adjudicating officer levying any penalty shall, while filing the appeal, deposit the amount of such penalty:
Provided further that where in any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, it may dispense with such deposit subject to
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such conditions as it may deem fit to impose so as to safeguard the realisation of penalty.
(2) Every appeal under sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made by the adjudicating officer or the Appropriate Commission is received by the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed:
Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.
(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.
(4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer or the Appropriate Commission, as the case may be.
(5) The appeal filed before the Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal:
Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period.
(6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer or the Appropriate Commission under this Act, as the case may be, in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit.
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WP No. 46495 of 20128.4. In this regard, he relies upon the decision in the case of KARNATAKA POWER TRANSMISSION CORPORATION LIMITED VS. R.K.POWERGEN PRIVATE LIMITED20 more particularly Paras 14, 15 and 16 thereof which are reproduced hereunder for easy reference:
14. The next question which requires consideration is assuming that this Court can entertain the Writ Petition notwithstanding there being an alternate and efficacious remedy by way of an appeal before the Tribunal, the Courts are empowered or for that matter have enough machinery to deal with a situation like this. The Apex Court in the case of W.B. Electricity Regulatory Commission v. Cesc Ltd., (Supra) has observed as follows:
"The Commission constituted under Section 17 of the 1998 Act is an expert body and the determination of tariff which has to be made by the Commission involves a very highly technical procedure, requiring working knowledge of law, engineering, finance, commerce, economics and management, It would be more appropriate and effective if a statutory appeal is provided to a similar expert body, so that the various questions which are factual and technical that arise in such an appeal, get appropriate consideration in the first appellate stage also. The Central Electricity Regulatory Commission which has a judicial member as also a number of other members having varied qualifications, is better equipped to appreciate the technical and factual questions involved in the appeals arising from the orders of the Commission. Neither the High Court nor the Supreme Court would in reality be appropriate appellate forums in dealings with this type of factual and technical matters. Therefore, it is recommended that the appellate power against an order of the State Commission under the 1998 Act 20 (2006) 2 KarLJ 608
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should be conferred either on the Central Electricity Regulatory Commission or on a similar body." It is brought to my notice that a Appellate Tribunal as contemplated under Section 111 of the Act has already been formed and is functioning. A notification to that effect is also produced. It is also brought to my notice that all three members of the Appellate Tribunal have already been appointed and assumed the office on 13.5.2005. In the circumstances the question of entertaining this petition when there is an alternate and efficacious remedy for redressal of the petitioner's grievance is available there is no reason as to why this Court should exercise its powers under Articles 226 and 227 of the Constitution and deal with the technical matter. In my considered view the grievance of the petitioner should be decided by the Appellate Tribunal consisting of experts.
15. Another reason as to why this Writ Petition cannot be entertained is because, as stated in the body of the Writ Petition itself, since there is no appellate Tribunal as yet formed, the present Writ Petition is filed. But however during this interregnum, the Appellate Tribunal has already come into effect and is functioning.
16. It is no doubt true that under Section 111(2) of the Act, a limitation is provided that an appeal will have to be preferred within 45 days from the date of receipt of the copy of the order. Proviso to Sub-section (2) of Section 111 also provides that the Tribunal can entertain an appeal after expiry of the said period of 45 days if it is satisfied that there is sufficient cause for not filing the appeal in time. Apparently the petitioners were prosecuting this writ petition in this Court as the Appellate Tribunal was not as yet constituted. Taking into consideration the fact that the writ petition was pending in this Court, the Tribunal shall take this fact into consideration as and when an appeal is presented with an application seeking for condonation of delay.
8.5. By relying on the above, he submits that there is an alternative remedy in terms of Section 111 (2) of the Act and as such, if the petitioner
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WP No. 46495 of 2012is aggrieved would have to approach the Appellate Tribunal.
8.6. He also relies upon the decision of the Hon'ble Apex Court in the case of UTTAR PRADESH POWER CORPORATION LTD., VS. NTPC LTD., AND ORS21 more particularly Paras 11 and 12 thereof which are reproduced hereunder for easy reference:-
"11. Our attention was drawn to the judgment delivered by this Court in West Bengal Electricity Regulatory Commission v. CESC Ltd. Reported in MANU/SC/0859/2002: (2002) 8 SCC 715 and more particularly to para 102 of the same judgment, which reads as under:
"102. We notice that the Commission constituted under Section 17 of the 1998 Act is an expert body and the determination of tariff which has to be made by the Commission involves a very highly technical procedure, requiring working knowledge of law, engineering, finance, commerce, economics and management. A perusal of the report of ASCI as well as that of the Commission abundantly proves this fact. Therefore, we think it would be more appropriate and effective if a statutory appeal is provided to a similar expert body, so that the various questions which are factual and technical that arise in such an appeal, get appropriate consideration in the first appellate stage also. From Section 4 of the 1998 Act, we notice that the Central Electricity Regulatory Commission which has a judicial member as also a number of other members having varied qualifications, is better equipped to appreciate the technical and factual questions involved in the appeals arising from the 21 (2011) 10 SCALE 499
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orders of the Commission. Without meaning any disrespect to the Judges of the High Court, we think neither the High Court nor the Supreme Court would in reality be appropriate appellate forums in dealing with this type of factual and technical matters. Therefore, we recommend that the appellate power against an order of the State Commission under the 1998 Act should be conferred either on the Central Electricity Regulatory Commission or on a similar body. We notice that under the Telecom Regulatory Authority of India Act, 1997 in Chapter IV, a similar provision is made for an appeal to a Special Appellate Tribunal and thereafter a further appeal to the Supreme Court on questions of law only. We think a similar appellate provision may be considered to make the relief of appeal more effective."
12. Looking to the observations made by this Court to the effect that the Central Commission constituted under Section 3 of the Act is an expert body which has been entrusted with the task of determination of tariff and as determination of tariff involves highly technical procedure requiring not only working knowledge of law but also of engineering, finance, commerce, economics and management, this Court was firmly of the view that the issues with regard to determination of tariff should be left to the said expert body and ordinarily the High Court and even this Court should not interfere with the determination of tariff." 8.7. By relying on the above, he submits that any order passed by the State Commission would have to be appealed before the CERC. In the present case, the decision is that of the CERC. As such, it cannot now be contended that it is the KERC who has the jurisdiction to decide the matter.
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WP No. 46495 of 20128.8. The SLDC deriving benefits under Regulations of 2008 cannot seek for a declaration that Regulations 2008 of the said Regulation is ultravires Electricity Act, 2003. A statutory authority cannot seek for quashing of a statutory provision be it in a parent Act or in the sub-ordinate legislation. CERC being the authority under the Regulations of the year 2008, the CERC rightly has the jurisdiction and decided the matter. Based on the above, he submits that the claim made by the petitioners is required to be rejected.
9. Sri.Harsha Gupta, learned counsel for respondent No.2 - CERC submitted that:
9.1. CERC has necessary powers to regulate all interstate electricity transmission since the CERC has to monitor the grid across the country. It is only when intrastate transmission occurs then the KERC would have jurisdiction.
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WP No. 46495 of 2012When there is an interstate element, the KERC which exercise jurisdiction within the State of Karnataka cannot have extra-territorial jurisdiction and it is for that reason that CERC is vested with the jurisdiction over the inter- state transmission of power.
10. Heard Sri.S.Srirnaga, learned Senior Counsel for the petitioners, Sri.Shridhar Prabhu, learned counsel for respondent No.1 and Sri.Harsha Gupta, learned counsel for respondent No.2-CERC and perused papers.
11. The points that would arise for consideration by this Court are:
1) Whether CERC would have the power to regulate the transmission and distribution of power of intra-State lines?
2) Whether CERC would have the power to regulate the transmission and distribution of power of inter-State lines?
3) Whether the disputes in the present matter could be raised under Section 79 (1)(f) of the Electricity Act?
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WP No. 46495 of 2012
4) Whether SLDC can regulate inter-State electricity transmission by exercising its statutory powers?
5) Whether there is a conflict of interest between KPTCL and SLDC?
6) Whether the order passed by CERC in Petition No.124/MP/2011 suffers from any illegality requiring interference at the hands of this Court?
7) Whether the petitioners would have to be relegated to an appeal before the Appellate Tribunal in lieu of Section 111 of the Electricity Act on the account of the decision of this Court in R.K.POWERGEN PRIVATE LIMITED case as also the decision of the Hon'ble Apex Court in the case of NTPC Ltd?
8) What order?
12. I answer the above points as under:
13. Answer to Point No.1: Whether CERC would have the power to regulate the transmission and distribution of power on intra-State lines? And Answer to Point No.2: Whether CERC would have the power to regulate the transmission and distribution of power on inter-State lines? 13.1. Point Nos.1 and 2 being related to each other are taken for consideration together.
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WP No. 46495 of 201213.2. The CERC or the Central Electricity Regulation Commission is defined in terms of Section 2(9) of the Act of 2003 to be the Commission referred to in Sub-Section (1) of Section 76. Section 76 comes under Part X of the Act of 2003 relating to Regulatory Commissions. Section 76 refers to the Constitution of the Central Commission which shall discharge the functions assigned to it under the Act. 13.3. Section 79 refers to the functions of the Central Commission and has been reproduced hereinabove.
13.4. A perusal of Section 79 would indicate that in terms of Sections 79(1)(c) and 79(1)(d) of the Act, the Commission would have the power to regulate the inter-State transmission of electricity as also to determine tariff for inter- State transmission of electricity. In terms of Section 79(1)(e) of the Act, the Central
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WP No. 46495 of 2012Commission can issue licenses to persons to function as transmission licensees and electricity traders with respect to their inter- State operations.
13.5. The State Commission is defined under Section 2(64) of the Act of 2003 to mean the State Electricity Regulatory Commission constituted under sub-Section (1) of Section 82 and includes a Joint Commission constituted under sub-Section (1) of Section 83.
13.6. Section 82 of the Act provides for the Constitution of a Commission for the State. Section 86 of the Act provides for the function of the State Commission.
13.7. Section 86 reads as under:-
Section 86. (Functions of State Commission): -
(1) The State Commission shall discharge the following functions, namely: -
(a) determine the tariff for generation, supply, transmission and wheeling of electricity,
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wholesale, bulk or retail, as the case may be, within the State:
Provided that where open access has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers;
(b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State;
(c) facilitate intra-State transmission and wheeling of electricity;
(d) issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State;
(e) promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;
(f) adjudicate upon the disputes between the licensees, and generating companies and to refer any dispute for arbitration;
(g) levy fee for the purposes of this Act;
(h) specify State Grid Code consistent with the Grid Code specified under clause (h) of sub-section (1) of section 79;
(i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees;
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WP No. 46495 of 2012
(j) fix the trading margin in the intra-State trading of electricity, if considered, necessary;
(k) discharge such other functions as may be assigned to it under this Act.
(2) The State Commission shall advise the State Government on all or any of the following matters, namely :-.
(i) promotion of competition, efficiency and economy in activities of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganization and restructuring of electricity industry in the State;
(iv) matters concerning generation,
transmission, distribution and
trading of electricity or any other matter referred to the State Commission by that Government.
(3) The State Commission shall ensure transparency while exercising its powers and discharging its functions. (4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.
13.8. In terms of Clause (a) of sub-Section (1) of Section 86, the State Commission can determine the tariff for generation, supply,
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WP No. 46495 of 2012transmission and wheeling of electricity, etc., within the State.
13.9. In terms of Clause (b) of sub-Section (1) of Section 86, the State Commission has the power to regulate electricity purchase and procurement of process etc., within the State. In terms of Clause (c) of sub-Section (1) of Section 86, the State Commission can facilitate intra-State transmission and wheeling of electricity. In terms of clause (d) of sub-Section (1) of Section 86 of the Act, the State Commission can issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State etc. 13.10. Thus, from a comparison of Section 79 of the Act and Section 86 of the Act, it is clear that the jurisdiction of a State Commission is limited
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WP No. 46495 of 2012to the transmission of electricity etc., within the State and the State Commission has the necessary powers only as regards aspects within the State i.e., intra-State. Whereas under Section 79, the powers of the Central Commission are relating to inter-State transmission, determination of tariff, functioning of a licensee etc. 13.11. It is therefore clear that whenever an aspect inter-State arises, it is the Central Commission, which has the power and the powers of the State Commission is restricted only to intra- State. If electricity is transmitted from one State to the other, if generation is from one State and consumption is another State or any other permutation of like kind, then the said transmission would amount to inter-State transmission which would come within the
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WP No. 46495 of 2012purview of only the Central Commission and not under the State Commission.
13.12. Section 83 of the Act of 2003 contemplates the establishment of Joint Commission by way of an agreement between two States or by Central Government for one or more union Territories. If such a Joint Commission is created, in my considered opinion, Joint Commission would have the powers in the State and/or the Union Territories for which it is created. In the present case, there is no Joint Commission which has been created. Therefore, the same would not arise for consideration. It is for the concerned authorities to create such a Joint Commission to address these kind of grievances at the earliest. 13.13. The decisions in Indo Rama Synthetic Ltd.1, Kamachi Sponge & Power Corporation Ltd.2 and Sal Steel3 are all matters which were related to intra state transmission and the
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WP No. 46495 of 2012regulation and/or schedule which had been formulated by the respective SLDC was within the State and all the said decisions referred to on the obligation of SLDC as also the responsibility of the SLDC for optimum scheduling and dispatch of electricity was within a State. None of those decisions are relating to inter-state transmission. Thus, those decisions would not have any bearing in the present matter. Since here the transmission is inter- state. There cannot be any dispute about a SLDC having jurisdiction intra-state. SLDC would not have jurisdiction over transmission inter-state.
13.14. Hence, I answer Points No.1 and 2 by holding that the KERC would have power to regulate the transmission and distribution of power on all intra-State lines. The CERC would not have power to regulate transmission and distribution
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WP No. 46495 of 2012intra-State, which can only be regulated by the State Commission. As a corollary the CERC would have power to regulate the transmission and distribution of power on all inter-State lines. The KERC would not have power to regulate transmission and distribution inter- State, which can only be regulated by the Central Commission.
14. Answer to Point No.3: Whether the disputes in the present matter could be raised under Section 79 (1)(f) of the Electricity Act? 14.1. Section 79(1)(f) of the Act has been reproduced hereinabove. The disputes, if any in respect of Clause (a) to (d) of sub-Section (1) of Section 79 can be adjudicated by the Central Commission. Similar adjudication powers has been vested with the State Commission under Section 86, in terms of Section 86 (1)(f) of the Act the power to adjudicate the dispute between the licensees and generating
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WP No. 46495 of 2012companies is vested with the State Commission which also has the power to refer the dispute to arbitration.
14.2. Section 86 (1)(f) of the Act has to be read in the context of Section 86 of the Act inasmuch as the licenses which are issued under Section 86(1)(d) of the Act is only to persons operating within the respective State where the Commission is located. Thus, by necessary implications the powers under Section 86(1)(f) of the Act which can be exercised by the State Commission would obviously be restricted to any disputes between the licensing and generating companies within that State for transmission and distribution of electricity and would not extend to intra-State transmission and distribution, which is covered under clauses
(a) to (d) of Section 79(1) of the Act of 2003.
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WP No. 46495 of 201214.3. It is therefore clear that the CERC would have the powers under Section 79(1)(f) as regards inter-State transmission and distribution and the State Commission would have the jurisdiction over intra-State transmission and distribution issues. As a corollary, the State Commission will not have power over inter- State and likewise, the CERC would not have power over intra-State disputes relating to generation, transmission and distribution. 14.4. The decisions in Godawari Power & Ispat Limited6, Tata Power Company Ltd7, Hukam Chand8, Shalimar Chemical Works Ltd.,9, Indraprasth Gas Ltd,10 Power Machines India Ltd.11 and Bhuwalka Steel Industries Ltd.,12 are all relating to delegation of authority, excessive delegation and/or the delegate acting beyond or contrary to the delegated power. The contention on that basis
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WP No. 46495 of 2012is that the CERC cannot usurp the power of KERC and adjudicate the dispute between SLDC and a power producer. In my considered opinion, the said decisions would not be applicable to the present case since in the present case we are dealing with inter-state power transmission, which is beyond the purview of the SLDC. The SLDC being empowered to deal with intra-state as a corollary the SLDC would not be empowered to schedule power which is to be transmitted inter-state. If that be so, the SLDC not having any jurisdiction, the State Commission viz., KERC would also have no jurisdiction to decide these disputes.
14.5. The present dispute is one relating to inter-
State transmission. Admittedly, the power/electricity is produced in the State of Karnataka and distributed outside the State of
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WP No. 46495 of 2012Karnataka. Therefore, in my considered opinion, in terms of Section 79(1)(f) of the Act, the CERC would have the powers to adjudicate the issues relating to inter-State transmission and distribution of electricity.
15. Answer to Point No.4: Whether SLDC can regulate inter-State electricity transmission by exercising its statutory powers?
15.1. SLDC or the State Load Dispatch Centre is defined under sub-Section (66) of Section 2 of Act of 2003 to be the Centre established under sub-Section (1) of Section 31. Section 31 has been reproduced hereinabove. In terms thereof, it is mandatory for the State Government to establish a Centre to be known as State Load Dispatch Centre, which shall be operated by a Government Company or any authority or Corporation established or constituted by the State under any Act and until such Government Company or any authority or
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WP No. 46495 of 2012Corporation is notified, the State Transmission Utility will operate the SLDC.
15.2. Section 32 deals with functions of SLDC.
Section 32 has been reproduced hereinabove. In terms whereof, SLDC shall be responsible for optimum scheduling and dispatch of electricity within a State, in accordance with the contracts entered into with the licensees or the generating companies operating in that State, monitor grid operations, keep the accounts of the quantity of electricity transmitted through the State grid, exercise supervision and control over the intra-State transmission system and it is responsible to carrying out real time operations for grid control and dispatch. Thus, in terms of the said provision, most of the work of the SLDC is with reference to the operations within the State where SLDC also has the
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WP No. 46495 of 2012power to exercise supervision and control over the intra-State transmission system. 15.3. In terms of sub-Section (1) of Section 33 of the Act, the SLDC may issue such directions and exercise such supervision and control as may be required for ensuring the integrated grid operations and for achieving the maximum economy and efficiency in the operation of power system in that State.
15.4. Reading of sub-Sections (1) and (2) of Section 33 would indicate that the SLDC has the power to exercise such supervision and control over the intra-state transmission system but directions can only be issued insofar as the operations of power system in that State. 15.5. This would indicate that no power has been vested with the SLDC to issue any directions insofar as power dispatched to another State or on an inter-State activity. The functions under
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WP No. 46495 of 2012Section 32 of the Act and power to issue directions under Section 33 of the Act by the SLDC is only restricted to intra-State and does not extend to inter-State transmission. 15.6. Thus, SLDC cannot regulate inter-State electricity transmission by exercising its statutory powers under the Act.
15.7. It is also required to be taken note of that in terms of Section 31 of the Act, a separate company is required to be established by the State. The Act having come into force in the year 2003, despite 20 years having lapsed there from, no action in this regard has been taken and the SLDC has been established under the State Transmission Utility. In my considered opinion, there are bound to be certain conflicts between the State Transmission Utility and the functioning of the SLDC.
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WP No. 46495 of 201215.8. It is but required that the State establishes a separate entity for SLDC who can function independent of the State Transmission Utility at the earliest at any rate within a period of 6 weeks from the date of receipt of copy of this order. The Registrar General is directed to forward a copy of this order to the Chief Secretary, Government of Karnataka for doing the needful.
16. Answer to Point No.5: Whether there is a conflict of interest between KPTCL and SLDC? 16.1. KPTCL - petitioner No.1 is the State Transmission Utility who is incharge of the transmission lines within the State and is defined under sub-Section (67) of Section 2 of the Act to be the Board or the Government Company specified by the State under sub- Section (1) of Section 39. The function of the State Transmission Utility in terms of Section
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WP No. 46495 of 201239 of the Act is to undertake transmission of electricity through intra-State Transmission System, coordinate with the Central Transmission Utility, State Governments etc., to ensure development of an efficient, coordinated and economical system of intra-State transmission lines, provide non-discriminatory open access to its transmission system etc. 16.2. In terms of sub-Section (1) of Section 31 of the Act, SLDC is required to be established in terms of sub-Section (2) of Section 31, which shall be operated by a Government Company and/or any authority or Corporation established by the State and until such establishment, SLDC shall operate under the State Transmission Utility. 16.3. The functions of the SLDC and the State Transmission Utility are such that SLDC could issue directions insofar as a conflict or a dispute which arises between the State Transmission
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WP No. 46495 of 2012utility on the one hand and the transmission licensees, distribution licensees, generating companies on the other. The SLDC being authorized to issue directions for compliances in terms of Section 33 of the Act, I am of the considered opinion that there is a possibility of the transmission utility using the powers under Section 33 of the Act in order to achieve its own purposes. There being conflict, the mandate under sub-Section (2) of Section 31 of the Act is required to be followed by establishing SLDC under a separate Government Company or authority or Corporation.
17. Answer to Point No.6: Whether the order passed by CERC in Petition No.124/MP/2011 suffers from any illegality requiring interference at the hands of this Court? 17.1. In view of my finding in respect of the above questions, SLDC not being empowered to issue any directions or add any clause in an agreement, when the generating companies
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WP No. 46495 of 2012requests for license, SLDC not being authorized to issue any directions as regards inter-State transmission, the present case being one of inter-State, the condition imposed by the SLDC is bad in law and not authorized. The dispute between the parties relating to inter-State generation, transmission and distribution, it is only the CERC who has the power to decide the matter and not the KERC. The CERC having taken into consideration all the relevant aspects, I do not find any infirmity in the said order.
18. Answer to Point No.7: Whether the petitioners would have to be relegated to an appeal before the Appellate Tribunal in lieu of Section 111 of the Electricity Act on the account of the decision of this Court in R.K.POWERGEN PRIVATE LIMITED case as also the decision of the Hon'ble Apex Court in the case of NTPC Ltd?
18.1. Any order passed by the State Commission or the Central Commission is required to be appealed before the Appellate Tribunal.
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WP No. 46495 of 2012Considering that this matter has been pending from the year 2012 and has been taken up on merits and all contentions which have been raised are considered, the relegation of the appellant to the Appellate Tribunal after a period of 11 years would in my considered opinion amount to travesty of justice.
19. Answer to Point No.8: What order?
19.1. The Writ Petition stands dismissed.
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JUDGE Prs List No.: 19 Sl No.: 1