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2019 (5) TMI 1984 - SC - Indian LawsRecovery of entire standby charges paid by Tata Power Company (TPC) to Maharashtra State Electricity Board (MSEB) - tariff payable by BSES to TPC included a component of standby charge - HELD THAT - The period in dispute is 1.4.1999 to 30.9.2004. It is apparent that TPC has an agreement with MSEB for standby supply of 550 MVA. Initially, in 1985, TPC has increased its generating capacity whereby reducing the offtake of electricity from MSEB to zero. In order to compensate MSEB for loss of revenue caused as a result of the stoppage of purchase of electricity, the MSEB entered into an arrangement with TPC whereby TPC was required to pay to MSEB initially for 300 MVA standby to be increased by 50 MVA every year. The standby was freeze in the year 1990 when the parties agreed not to increase the standby beyond 550 MVA. The standby facility was made available to TPC in the event there was a failure of power in TPC s generation of 1777 MW. BSES/REL used to purchase electricity from TPC between 29 percent to 37 percent from 1998 to 2006. The standby charges for aforesaid purchase were factored into the tariff charged from its retail customers. The standby charges to the extent of supply were borne by BSES/REL for optimum supply from TPC when interconnectivity was provided at Borivali point as per the Government order. The dispute arose between TPC and BSES/REL as to whether BSES/REL entitlement to draw 275 MVA from TPC in the case of outage and failure of electricity supply, the charges which were required to be paid were over and above the charges that would be paid for energy actually drawn. The main principles on the basis of which Agreement was to be reached between TPC and BSES/REL were settled. As per clause 2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220 KV interconnection at Borivali at Rs.3.5 crores per month. The parties had agreed to cooperate in order to ensure that Government order dated 19.1.1998 is implemented in the spirit of it. A detailed power supply agreement was to be entered into by 21.4.1998. The agreement could not be executed as consensus with respect to several aspects could not be reached - The power was conferred upon the MERC vide notification dated 27.10.2000 under the provision of Section 22(2)(n) of Electricity Regulatory Commission Act, 1998, to adjudicate upon the disputes and differences between licensees and utilities. On 4.12.2000, BSES/REL had filed an application to MERC in respect of sharing of standby charges between BSES/REL and TPC. The prayers were made to regulate action and standby charges levied by them and to fix and determine the standby charges payable by them. Several factors were required to be taken into consideration, on that basis aforesaid figure has been worked out. It has also been considered that electricity used to be purchased by BSES/REL from TPC to the aforesaid extent and the standby charges used to be realised which were factored in the tariff, which liability was ultimately passed on to the retail consumers. Even when the Principles of Agreement have been reached as to standby charges though it was subject to revision basis was fixed which could not have been departed from, it was on consideration of several aspects - Considering the standby charges of Rs.24.75 crores recovered by MSEB from TPC with effect from 1.10.1996 and as per the Government order and Principles of Agreement Rs.3.5 crores was additionally being available and a difference of standby which was made to increase the liability Rs.24.75 crore per month to Rs.30.25 crores per month. There are force in the submission raised on behalf of BSES/REL that order of APTEL has already been worked out even otherwise it is found to be just and equitable. No case for interference with the same is made out - there is no question of applicability of Article 14 of the Constitution. As a matter of fact, what was agreed in the Principles of Agreement more amount than that has been ordered to be paid on the basis of principles of business equilibrium and other factors. The order passed by Technical and Judicial Members of APTEL is hereby upheld. The amount which is payable to Reliance Energy Limited, deposited or secured by way of bank guarantee by TPC as per order dated 07.02.2007 along with interest lying with the Registrar of this Court as per agreement of the Counsel for Reliance Energy Limited and Adani Electricity Mumbai Limited be paid to Adani Electricity Mumbai Limited. Appeal dismissed.
Issues Involved:
1. Determination of standby charges payable by BSES/REL to TPC. 2. Validity and enforcement of the Principles of Agreement between TPC and BSES/REL. 3. Jurisdiction of MERC and APTEL in determining and adjudicating the dispute. 4. Proportionate sharing of standby charges between TPC and BSES/REL. 5. Implementation and compliance with the orders of MERC and APTEL. Issue-wise Detailed Analysis: 1. Determination of Standby Charges Payable by BSES/REL to TPC: The dispute revolves around the standby charges that BSES/REL should pay to TPC. Initially, TPC was the sole generator supplying electricity to BSES/REL, with standby charges being a component of the tariff. The Government of Maharashtra, based on a committee's recommendation, stipulated that BSES/REL should pay Rs.3.5 crores per month to TPC for standby facilities. This was over and above the Rs.24.75 crores per month TPC paid to MSEB, which was factored into TPC's tariff. 2. Validity and Enforcement of the Principles of Agreement between TPC and BSES/REL: The Principles of Agreement dated 31.1.1998 between TPC and BSES/REL stipulated that BSES/REL would pay Rs.3.5 crores per month for the 220 KV interconnection at Borivali. However, no formal agreement was executed. The Supreme Court recognized that the agreement was independent of the TPC-MSEB agreement, and TPC was bound to supply standby power to BSES/REL regardless of whether it drew from MSEB. 3. Jurisdiction of MERC and APTEL in Determining and Adjudicating the Dispute: The Electricity Regulatory Commission Act, 1998, conferred jurisdiction on MERC to determine tariffs and adjudicate disputes between licensees and utilities. The Supreme Court affirmed that MERC had the exclusive power to determine the tariff, including standby charges, as reflected in previous judgments. The High Court's order remitting the matter to MERC was upheld, and MERC's decision was subsequently challenged before APTEL. 4. Proportionate Sharing of Standby Charges between TPC and BSES/REL: MERC initially directed BSES/REL to bear 25% of the standby charges, which was challenged and remitted back. APTEL's majority judgment, consisting of the Judicial and Technical Members, concluded that BSES/REL should bear 23% of the standby charges, while TPC should bear 77%. This decision was based on the fact that TPC had already recovered a significant portion of the standby charges through its tariff and additional amounts from BSES/REL. 5. Implementation and Compliance with the Orders of MERC and APTEL: The Supreme Court noted that there was no stay on the APTEL order, implying that the order was implemented, and the corresponding liabilities were factored into the tariff passed on to customers. The Supreme Court upheld the APTEL order, finding it just and equitable, and dismissed the appeals filed by TPC and BSES/REL. Conclusion: The Supreme Court upheld the majority judgment of APTEL, which directed that BSES/REL should bear 23% of the standby charges, with the balance to be borne by TPC. The Court found no merit in the appeals and confirmed that the orders of MERC and APTEL were implemented appropriately. The appeals were dismissed, and the amounts secured by TPC were ordered to be paid to Adani Electricity Mumbai Limited.
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