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Civil Appeal Nos. 9845-9846 of 2016 etc. M/s. Indsil Hydro Power and Manganese Limited vs. State of Kerala and Ors.

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allowing Writ Appeal Nos.1345 and 1355 of 2013 preferred by State of Kerala against INDSIL and CUMI respectively.

2. On 07.12.1990, the Government2 framed a policy vide G.O.(MS)No.23/90/PD (the Policy, for short) allowing private agencies and public undertakings to set up hydel schemes for generation of electricity at their own cost. As per the Policy, the matters concerning the construction, operation and maintenance of the hydel scheme were to be managed as per the stipulations made by the Government/Board3. Clauses 2, 14 and 15 of the Policy were as under: -

“2. Private agencies/ public undertakings shall be allowed the setting up of sanctioned hydel schemes of the category small/ mini/ micro at their own cost, the construction, operation and maintenance being managed by them as per the stipulations insisted upon by Government/ Board. (The stipulated conditions as per Indian Electricity Act, 1910. Electricity (Supply) Act, 1948, other related rules and orders from Central and State Governments).

15. For assessment of water quantity used, the application of the formula BH-Power in KW where Q is in NI/Sec and H is the net head in meter for which the machines are designed by the manufacturers, will be made use of.”

3. CUMI has three factories in State of Kerala and is in the business of manufacturing electro minerals using electric arc furnaces, which process requires continuous supply of electricity. CUMI filed an application with the State for allotment of “Maniyar Hydel Scheme” in the River Kakkad Basin.

10. On 11.10.2002, Guidelines were issued by the Government after noting the Policy and the recommendations of the Empowered Committee set up vide G.O. dated 5.9.2002. These Guidelines dealt with transmission and distribution losses in wheeling the energy to CPPs but did not deal with royalty for the use of water. The relevant portion of these Guidelines was: -

“The Empowered Committee constituted as per the GO read as 3rd paper above, to oversee the implementation of the reforms of the KSEB and to examine the details for the erection of Small and Mini Hydel Projects, in its meeting held on 5.9.02 and 12.09.02 considered the scope for taking small hydel projects and recommended to Government that the small hydel projects excluding dam toe and tail race projects should be opened up for captive consumers and Independent Power Producers including public sector undertakings and also made the following recommendations:-