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2015 (11) TMI 1287 - SC - Indian LawsGeneration of Electricity - Power Purchase Agreement (PPA) - Whether the appellant was entitled to avail rebate of 2.5 % on the part payment of the monthly invoice within 5 business days from the date of the presentation of the monthly invoice. - Held that - the appellant has illegally arrogated to itself the right to adjudicate by unilaterally assuming the jurisdiction not available to it. It was required to comply with Article 10 of the PPA which provides for Compensation Payment and Billing. We are also not able to accept the submission of Mr. Nariman that invoices could not be paid in full as they were only estimated invoices. It is true that reconciliation is to be done annually but the payment is to be made on monthly basis. This cannot even be disputed by the appellant in the face of its claim for rebate at the rate of 2.5% for having made part payment of the invoice amount within 5 days. We also do not find any merit in the submission that any prejudice has been caused to the appellant by the delayed submission of annual invoice by the respondents. The late payment clause only captures the principle that a person denied the benefit of money, that ought to have been paid on due dates should get compensated on the same basis as his bank would charge him for funds lent together with a deterrent of 0.5% in order to prevent delays. It is submitted by Mr. Salve and Mr. Bhushan that bankers of the respondents have applied quarterly compounding or monthly compounding for cash credits during different periods on the basis of RBI norms. Article 10.6 of the PPA has followed the norms of the bank. This can not be said to be unfair as the same principle would also apply to the appellants.
Issues Involved:
1. Entitlement of the Appellant to Rebate. 2. Jurisdiction of the State Commission under Section 86(1)(f) of the Electricity Act, 2003. 3. First in First Out (FIFO) method for adjustment of payment. 4. Limitation, delay, and laches. 5. Bar under Order 2 Rule 2 CPC. 6. Non-filing of Annual Invoices. 7. Determination of capital cost. 8. Deduction on the monthly invoices. 9. Excess claims in the monthly invoice - unjust enrichment. 10. Interest on Late Payments. Issue-wise Detailed Analysis: 1. Entitlement of the Appellant to Rebate: APTEL held that under Article 10.2(a), 10.2(b)(i), and 10.2(e) of the PPA, the appellant is obliged to pay the full amount of the invoice within the due date to be eligible for the rebate of 2.5% or 1%. The appellant neither paid the full amount for every invoice nor raised the dispute within one year, making it ineligible for rebate. 2. Jurisdiction of the State Commission under Section 86(1)(f): APTEL, relying on the judgment in Gujarat Urja Vikas Nigam Ltd. Vs. Essar Power Ltd., held that the State Commission has the discretion to decide whether the dispute should be adjudicated by itself or referred to an arbitrator. The appellant cannot dictate that the State Commission ought to have referred the dispute to arbitration. The State Commission can adjudicate all disputes, including money claims between Licensees and Generating Companies. 3. FIFO Method for Adjustment of Payment: APTEL approved the decision of the State Commission that the respondent was justified in adopting the FIFO method for adjusting payments, in accordance with Section 60 of the Indian Contract Act, 1872. 4. Limitation, Delay, and Laches: APTEL held that the Limitation Act would not apply to proceedings under the Electricity Act. Sections 60 and 61 of the Indian Contract Act permit the creditor to adjust the amount on a FIFO basis. The bar under Order 2 Rule 2 of the CPC was not applicable in this case. 5. Bar under Order 2 Rule 2 CPC: APTEL held that the bar under Order 2 Rule 2 of the CPC would not be applicable in the facts of this case. 6. Non-filing of Annual Invoices: APTEL affirmed the State Commission's direction to the respondent to redraw the annual invoices, acknowledging that the respondent should have filed the annual invoices in time. 7. Determination of Capital Cost: APTEL approved the findings of the State Commission that the appellant had adopted delaying tactics by not cooperating in the finalization of the capital costs. 8. Deduction on the Monthly Invoices: The issue was resolved as the respondent gave up the claim on account of capital costs incurred on Gas Boosting Station and Conditioning System, and the Power Company was directed to redraw the monthly invoices. 9. Excess Claims in the Monthly Invoice - Unjust Enrichment: APTEL found that the respondent company is entitled to interest on late payment of dues under the provisions of the PPA. 10. Interest on Late Payments: APTEL held that the respondent company is entitled to interest on late payment of dues under the provisions of the PPA. Conclusion: The Supreme Court upheld the findings of the APTEL and the State Commission. The appeal was dismissed, affirming that the appellant was not entitled to a rebate due to non-payment of full invoice amounts and that the State Commission had jurisdiction to adjudicate the disputes. The FIFO method for payment adjustment was justified, and the Limitation Act did not apply to the proceedings. The appellant's claims regarding the non-filing of annual invoices, determination of capital costs, and interest on late payments were also dismissed. The applications for impleadment and directions were rejected as dilatory tactics.
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