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2020 (5) TMI 738 - SC - Indian LawsRejection of claim for interest on deemed loan component - HELD THAT - There is no dispute that the PPA which the parties entered into specifically referred to the notification of 30.03.1992 and further went on to state that for the first Kwh/KW, a plant load factor of 68.5% fixed charges and variable charges were deployed. For generation achieved over and above this by the concerned unit CLP, an incentive @ 5.75% for every 1% increase over and above the fixed and variable charge payable was agreed to. Significantly, the fixed and variable charges are in consonance with the statutory notification of 30.03.1992 (which was also later amended on 17.01.1994). This much is clear from a plain reading of clause 7.1 of the Schedule VII to the PPA itself. In view of the fact that the notification amended on 06.11.1995 was a statutory one, there cannot be any doubt that it was binding upon the parties - the change of law provision (Clause 6.5 of the PPA) clearly contemplated that any amendment to the prevailing tariff notification (dated 30.03.1992) would bind the parties. Since Note (2) was an amendment, which dealt with the issue of incentive, it cannot now be said that it was inapplicable. The findings of the lower authorities, therefore, are correct; no interference is called for. Whether the GERC and APTEL fell into error in granting restricted refund calculable for the 3 year period prior to Gujarat Urja's application? - HELD THAT - There was no admission on the part of CLP, at least of the kind, that extended the time for preferring an application for recovery of excess payments. It has been consistently ruled by this court that repeated letters, or exchange of communications, do not extend the period of limitation, provided by law. Payment of interest on deemed equity - HELD THAT - The parties did not harbor any doubt about the period for which the specified interest was payable on such deemed loan. The rate of interest was fixed; likewise, the date from which payment obligations were to arise, too were known. Also, the date upto which the interest on such deemed loan payments were to be made, was known and fixed. In these circumstances, CLP's claim that the payment of interest for a prior period was outstanding, and constituted Gujarat Urja's liability, is insubstantial. In the present case, the clear agreement between the parties was that interest on the sum of ₹ 53.90 crores was payable for the specified period 01.07.2003 to 31.12.2009.Therefore, CLP's claim that any amount was payable, for any period prior to 01.07.2003, was not tenable. Had CLP wished so, nothing prevented it to claim for it during negotiations and have it included as a term of the contract. Once having settled for a specified sum, on an amount (₹ 53.90 crores) that was only fictionally a loan - and treated as such, for purpose of fixing interest payable, considering the equity infused, in excess of the tariff regulations, the absence of any like item, such as interest for prior period, precludes a claim. But it was really part of the equity component. Therefore, interest was per se not payable, but could be paid in terms of the tariff notification or the agreement. No claim on any other legal or equitable considerations could have been made. Appeal dismissed.
Issues Involved:
1. Applicability of deemed generation incentive to CLP under the amended notification dated 06.11.1995. 2. Limitation period for recovery of excess payments made by Gujarat Urja to CLP. 3. Interest on deemed loan component prior to the period 2003. Issue-wise Detailed Analysis: 1. Applicability of Deemed Generation Incentive: The primary issue was whether the deemed generation incentive was payable to CLP under the amended notification of 06.11.1995. The erstwhile Gujarat Electricity Board (GEB), now Gujarat Urja, entered into a Power Purchase Agreement (PPA) with CLP on 03.02.1994. The PPA stipulated that Gujarat Urja was obligated to purchase and CLP to supply 635 MW of electricity for 20 years. Initially, a notification dated 30.03.1992 under Section 43A of the Electricity Supply Act, 1948, provided for an incentive for units using naphtha. However, an amendment on 06.11.1995 stated that no deemed generation incentive would be payable to generating companies using naphtha as fuel. Despite this, CLP continued billing Gujarat Urja for the incentive, which was paid until 2000. The Gujarat Electricity Regulatory Commission (GERC) later ruled that the incentive was not payable to CLP, a decision upheld by the Appellate Tribunal for Electricity (APTEL). The Supreme Court concurred, stating that the statutory notification of 06.11.1995 was binding and superseded the PPA terms, thus no incentive was payable post-amendment. 2. Limitation Period for Recovery of Excess Payments: Gujarat Urja sought to recover excess payments made to CLP from 1997-98 to 2005-06, arguing that the payments were made under a mistaken belief that the incentive was payable. CLP contended that principles of estoppel precluded recovery and that the matter was time-barred. The GERC allowed recovery only for the three years prior to the filing of the petition, deeming earlier claims time-barred. The APTEL upheld this decision. The Supreme Court found no merit in Gujarat Urja's argument for a broader recovery period, noting that the cause of action arose in May 1996 when Gujarat Urja rejected CLP's claim for the incentive. The Court agreed with APTEL's finding that repeated communications did not extend the limitation period, and thus, the recovery was rightly limited to three years prior to the petition. 3. Interest on Deemed Loan Component Prior to 2003: CLP claimed interest on a deemed loan component of ?53.90 crores, arguing it was due as a loan and interest should be calculated based on normative repayment. The supplementary agreement dated 05.12.2003 recognized this amount as "Own Capital" with a 14% interest rate effective from 01.07.2003 to 31.12.2009. The GERC and APTEL rejected CLP's claim for interest prior to 2003, stating that the agreement explicitly defined the period for which interest was payable. The Supreme Court upheld this view, noting that the agreement was clear and unambiguous about the interest period and rate. The Court emphasized that any claim for interest prior to the agreed period was untenable and that the contract terms were binding. Conclusion: The Supreme Court dismissed both appeals, affirming the decisions of the GERC and APTEL. The Court held that the amended notification dated 06.11.1995 was binding and precluded the payment of deemed generation incentives to CLP. It also upheld the limitation period for recovery of excess payments and rejected the claim for interest on the deemed loan component prior to the specified period in the supplementary agreement.
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