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2017 (10) TMI 1533 - SC - Indian LawsExtension of period of tariff order operation - whether the Gujarat Electricity Regulatory Commission (the Commission), in exercise of its inherent powers, could have extended the control period for the 1st respondent Company (Respondent no. 1)? HELD THAT - That question is no more res integra. There are recent judgments of this Court which are relevant in this context. In GUJARAT URJA VIKAS NIGAM LIMITED VERSUS EMCO LIMITED ANOTHER 2016 (2) TMI 1284 - SUPREME COURT , this Court has held that the control period could be extended - while addressing another grey area as to whether the Commission has the power to amend tariff despite the terms of the PPA, this Court in Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure Limited and others , after analyzing scheme of the Act, has answered the question in affirmative. An amendment to tariff by the Regulatory Commission is permitted under Section 62(4) read with Section 64(6) of the Act. Section 86(1)(a) clothes the Commission with the power to determine the tariff and under Section 86(1)(b), it is for the Commission to regulate the price at which electricity is to be procured from the generating companies. Section 86 (1)(e) deals with promoting co-generation and generation of electricity from renewable sources of energy . Therefore, there cannot be any quarrel with regard to the power conferred on the Commission with regard to fixation of tariff for the electricity procured from the generating companies or amendment thereof in the given circumstances. This Court should be specially careful in dealing with matters of exercise of inherent powers when the interest of consumers is at stake. The interest of consumers, as an objective, can be clearly ascertained from the Act. The Preamble of the Act mentions protecting interest of consumers and Section 61(d) requires that the interests of the consumers are to be safeguarded when the Appropriate Commission specifies the terms and conditions for determination of tariff. Under Section 64 read with Section 62, determination of tariff is to be made only after considering all suggestions and objections received from the public. Hence, the generic tariff once determined under the statute with notice to the public can be amended only by following the same procedure. Therefore, the approach of this Court ought to be cautious and guarded when the decision has its bearing on the consumers. - Extension of control period has been specifically held to be outside the purview of the power of the Commission as per EMCO (supra). This appeal is hence, allowed. The impugned orders are set aside. However, we make it clear that this judgment or orders of the Appellate Tribunal or Commission shall not stand in the way of the Respondent no.1 taking recourse to the liberty available to them for re-determining of tariff if otherwise permissible under law and in which case it will be open to the parties to take all available contentions before the Commission. In the present case, the first respondent obtained the Chief Electrical Inspector Certificate, which is the statutory mandate as per Section 162 of the Act only on 13.03.2012, nearly two months after the expiry of the Tariff Order (2010). Whether the state Commission has inherent powers to extend the control period of Tariff Order dated 29.01.2010 beyond the control period in respect of one PPA? - HELD THAT - Section 181 of the Electricity Act, 2003 empowers the State Commission to make regulations consistent with the Act and the Rules to carry out the provisions of the said Act and, inter alia, provide for the matters indicated thereon. In exercise of the powers conferred under Section 181 of the Electricity Act, 2003 and under Section 127 of Gujarat Electricity Industry (Re-organization and Regulation) Act, 2003 and all powers enabling it in that behalf, the Gujarat Electricity Regulatory Commission framed the Conduct of Business Regulation - The State Commission and the Appellate Tribunal held that under the Conduct of Business Regulations, 2004 and Section 86 of the Electricity Act, 2003, the State Commission has inherent jurisdiction to extend the control period of the Tariff Order 2010 and the tariff rate thereon beyond 28.01.2012. The Appellate Tribunal further held that the control period of the Tariff Order was fixed by the State Commission itself and hence, the State Commission has inherent powers to extend the control period of the Tariff Order. The inherent powers being very wide and incapable of definition, its limits should be carefully guarded. Inherent powers preserved under Regulation 80 (which is akin to Section 151 of the Code) are with respect to the procedure to be followed by the Commission in deciding the cause before it. The inherent powers under Section 151 CPC are procedural in nature and cannot affect the substantive right of the parties. The inherent powers are not substantive provision that confers the right upon the party to get any substantive relief. These inherent powers are not over substantive rights which a litigant possesses - The inherent power is not a provision of law to grant any substantive relief. But it is only a procedural provision to make orders to secure the ends of justice and to prevent abuse of process of the Court. In the case at hand, rights and obligations of the parties flow from the terms and conditions of the Power Purchase Agreement (PPA). PPA is a contract entered between the GUVNL and the first respondent with clear understanding of the terms of the contract. A contract, being a creation of both the parties, is to be interpreted by having due regard to the actual terms settled between the parties. As per the terms and conditions of the PPA, to have the benefit of the tariff rate at ₹ 15/- per unit for twelve years, the first respondent should commission the Solar PV Power project before 31.12.2011. It is a complex fiscal decision consciously taken by the parties. In the contract involving rights of GUVNL and ultimately the rights of the consumers to whom the electricity is supplied, Commission cannot invoke its inherent jurisdiction to substantially alter the terms of the contract between the parties so as to prejudice the interest of GUVNL and ultimately the consumers - It is not within the powers of the Commission to exercise its inherent jurisdiction to extend the control period to the advantage of any party and to the disadvantage of the other would amount to varying the terms of the contract between the parties. Sanctity of Power Purchase Agreement - HELD THAT - The tariff rate of ₹ 3.29/- per KWH was subject to escalation and subject to periodic review. Evacuation was changed from a distance of 4 kms. to 23 kms. from its switch yard. On account of the same, respondent No.1 therein had incurred an additional cost of about ₹ 10 crores which was not envisaged in the Concession Agreement. In such facts and changed circumstances, this Court thought it apposite to take a lenient view and allow the State Commission to re-determine the tariff rate - the respondent No.1 is bound by the terms and conditions of PPA entered into between respondent No.1 and the appellant by mutual consent and that the State Commission was not right in exercising its inherent jurisdiction by extending the first control period beyond its due date and thereby substituting its view in the PPA, which is essentially a matter of contract between the parties. When the 1st respondent commissioned its project beyond 13.03.2012, Commission cannot exercise its inherent jurisdiction and vary the terms to extend the control period of Tariff Order dated 29.01.2010 in so far as the 1st respondent of the contract-Power Purchase Agreement (PPA) between GUVNL and the first respondent - the earlier order passed by this Court in C.A. No.2315 of 2013 (dated 01.04.2013) has not conclusively decided the substantial question of law inter-se the parties that is exercise of inherent jurisdiction by the Commission to vary the terms of PPA by extending the control period beyond the stipulated time. Application disposed off.
Issues Involved:
1. Whether the Gujarat Electricity Regulatory Commission (the Commission) has the inherent power to extend the control period for the tariff order. 2. The statutory framework governing the determination and amendment of tariffs under the Electricity Act, 2003. 3. The implications of the Power Purchase Agreement (PPA) and its terms on the tariff applicable. 4. The legal validity of the Commission's and Appellate Tribunal's decisions regarding the extension of the control period. 5. The scope and limitations of the Commission's inherent powers under the Conduct of Business Regulations. Detailed Analysis: 1. Inherent Power to Extend Control Period: The principal question was whether the Commission could extend the control period for the 1st respondent Company. The control period is the duration during which a specific tariff order is in effect. The Commission initially refused to extend the control period, stating that the reasons given by the petitioners were project-specific and did not indicate a statewide issue necessitating an extension. The Appellate Tribunal, however, held that the Commission had inherent power to extend the control period even in individual cases, emphasizing that such power should be exercised to meet the ends of justice. 2. Statutory Framework: The relevant statutory provisions include Sections 61, 62, and 64 of the Electricity Act, 2003, which outline the principles and procedures for tariff determination. Section 86 specifies the functions of the State Commission, including the determination of tariffs and regulation of electricity purchase. Section 94 grants the Commission powers similar to those of a civil court for specific purposes. Regulations 80 to 82 of the Gujarat Electricity Regulatory Commission (Conduct of Business) Regulations save the inherent powers of the Commission to make necessary orders for justice and to prevent abuse of process. 3. Power Purchase Agreement (PPA): The PPA between the parties included a provision that if the commissioning of the solar power project was delayed beyond 31st December 2011, the tariff applicable would be the one determined by the Commission effective on the date of commissioning or the tariff mentioned in the PPA, whichever was lower. The Commission's refusal to extend the control period was based on this provision, stating that the petitioners had agreed to these terms by signing the PPA. 4. Legal Validity of Decisions: The Appellate Tribunal's decision to remand the matter back to the Commission for rehearing on the merits of each individual case was challenged. The Supreme Court dismissed the appeal against the Tribunal's order but clarified that the Commission should decide the issue independently and in accordance with the law, without being influenced by the Tribunal's observations. The Commission, upon rehearing, allowed the extension of the control period, finding that the delay in commissioning the project was due to reasons beyond the control of the petitioner. 5. Scope and Limitations of Inherent Powers: The Supreme Court analyzed whether the Commission's inherent powers under Regulations 80 to 82 could be used to extend the control period. It concluded that the inherent powers are procedural and cannot be used to alter substantive rights or terms of the PPA. The Court emphasized that the Commission's inherent powers are limited to procedural matters and cannot override specific statutory provisions or contractual terms. Conclusion: The Supreme Court held that the extension of the control period was outside the purview of the Commission's inherent powers as per the decision in Gujarat Urja Vikas Nigam Limited v. EMCO Limited. The appeal was allowed, and the orders extending the control period were set aside. However, the judgment clarified that the respondent could seek re-determination of the tariff if permissible under the law, and all contentions could be raised before the Commission.
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