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TMI Blog2003 (3) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... on initially a Memorandum of Understanding dated 17-10-1998 was entered into between the Andhra Pradesh State Electricity Board (as it was then) on the one hand and six public limited companies. The whole idea behind incorporating the respondent Corporation is as it appears from the material placed before us, that the Andhra Pradesh State Electricity Board was not in a position to supply electrical energy to all its customers as demanded by them and therefore there was a need to create more power generating stations. In the Memorandum of Understanding referred to above, it is specifically mentioned : "The electricity i.e., both power and energy to be generated by APGPCL shall be shared between the Participating Industries and A.P. Transco in proportion to their paid-up share capital. . . ." 5. In fact the rights and obligations of the erstwhile Andhra Pradesh State Electricity Board, in this context, devolved upon a company called "A.P. Transco" which came into existence pursuant to the scheme of a subsequent State enactment called "Andhra Pradesh Electricity Reforms Act, 1998". When the respondent Corporation was brought into existence pursuant to the above mentioned Memor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.P. Transco at almost 100 per cent. It was also contained in the above MOU-I that if the power generated by the respondent-company could not be utilised by the various participating industries either in full or in part, then the A.P. Transco is given the 1st claim over such unutilised power on a price to be mutually settled between the A.P. Transco and the respondent. Pursuant to the MOU-I, the respondent-company was incorporated which had initially set up a 100 MW Natural Gas based Power Generating Station at Vijjeswaram in West Godavari District and in fact been generating and distributing power. Subsequently, the respondent-company further expanding its activity by setting up another plant with a capacity of 172 MW power plant at Vijjeswaram and for the said purpose another Memorandum of Understanding (hereinafter referred to as MOU-II for the sake of convenience) was brought into existence on 19-4-1997 between the respondent-company herein and the APSEB, now A.P. Transco and 23 other public limited companies. 8. It may not be necessary to give the details of the MOU-II for the purpose of this case except noticing that under Clause 6 of the MOU-II, it is agreed that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the bill for the period of delay if it does not pay the bill within the due date." "( ii ) Further Resolved that the following Clause be included in the first part of Clause 6 of Article 3 of the Memorandum of Understanding-II and a new Clause to be added as Clause 19A in the Memorandum of Understanding-I. The Participant shall pay an additional charge [surcharge] at the rate as may be fixed by the Board of Directors. The Board should review such rate every year before beginning of Financial Year taking into account the prevailing PLR of the Company s main bankers. Two months period be allowed for payment of dues up to March 2001 billing months and thereafter the two months will be reduced to one month i.e., power will not be allocated after one month of the due date of monthly bills, including surcharges and minimum charges, if remaining unpaid." 11. The appellant-company was admittedly in arrears to the respondent-company to the tune of Rs. 8.39 Crores as of 31-3-2001. It therefore sought of facility from the respondent-company to permit the appellant to pay the outstanding amount in instalments of Rs. 75 lakhs per month. The respondent-company did not make any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommit their honour as per the provisions of the MOU. In fact, the Board of Directors in their meeting held on 28th June, 2001 reiterated that to implement the GM decision without fail on those defaulted Participating Industries. Please be noted that we are not supposed to allocate the power for this August 2001 Billing Month. However, we have decided to allocate the power for August 2001 Billing Month to avoid loss to your industry, despite much inconvenience to the management, because this will invite criticism from all quarters. However, we are giving a last chance to your industry, if you do not clear the dues on or before 23-8-2001, the allocation of power will not be made for the September 2001 Billing Month and further Billing Months to your industry, i.e., 23-8-2001 to 23-9-2001. As agreed by the shareholders in the meeting held on 16-3-2001 and as per the MOU this action is initiated as the company has no option but to disconnect the power since all the facilities extended to you by the company were failed and the company is no way responsible, for any loss caused to your industry for non-allocation of power by APGPCL. It may be noted that in the event of disconnectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II, your share will be allocated to other Participating Industries who requires additional power than their share, if other Participating Industries not required additional power, then you have to pay the Fixed charges on your share of power." 14. Finally, by a letter dated 23-9-2002, the respondent informed the appellant that the Board of the Respondent Company came to a conclusion that the grant of instalments to the appellant was inconsistent with the resolution dated 16-3-2001, referred to earlier and therefore decided that the facility of granting instalments should be withdrawn and called upon the appellant to pay the arrears immediately failing which the appellant would not be allocated it s share of power from October 2002 billing month onwards. The relevant portion of the letter reads as follows: "Letter, some of the shareholders of APGPCL made representation that APGPCL should implement the Resolution passed in the EGM held on 16-3-2001, if dues were exceeded beyond two months, the allocation of power shall not be given. The Board has reviewed the position of Debtors and noted that instalments were sanctioned to M/s. Priyadarshini Cements Ltd., by the management, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 9 of the Arbitration and Conciliation Act, 1996. Along with the said O.P., the appellant has filed the I.A. seeking an interim mandatory injunction against the respondent herein to restore the power supply to the appellant forthwith and also permit the appellant to pay the outstanding amount due to the respondent by way of monthly instalments of Rs. 25 lakhs with interest at the rate of 18 per cent per annum. By the impugned order, the said I.A. was dismissed and hence the present appeal. 17. The learned counsel for the appellant submitted that the resolution dated 16-3-2001 is not intended to be acted upon. Apart from the appellant, A.P. Transco and another Participating Industry [Cement Corporation of India Limited] are also in arrears of huge amounts towards the charges of the power supplied to them by the respondent Corporation. The respondent Corporation did not take action against the above mentioned two bodies in terms of the Resolution dated 16-3-2001, but chose to implement the said resolution only in the case of the appellant. The learned counsel, therefore, argued that the action of the respondent Corporation in taking such action against the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njunction could be granted in a proper case, such an injunction normally be granted so as to restore the status quo ante . 19. The following questions emerge : ( i ) Whether the respondent-company is "State" as defined under article 12 of the Constitution of India and therefore bound by the mandate contained in article 14 of the Constitution of India ; ( ii ) whether the Resolution dated 16-3-2001 of the respondent-company is intended to be acted upon and whether it was in fact acted upon uniformly with reference to all the Participating Industries; ( iii ) whether the decision of the respondent-company to dis-allocate the share of the energy to the appellant herein with effect from October 2002 billing month would amount to an act of oppression on the part of the majority shareholders against the appellant herein; ( iv ) whether on the facts and circumstances of the case, an interim mandatory injunction such as the one prayed by the appellant can be granted. 20. The learned counsel for the appellant argued that the respondent is "State" as defined under article 12 of the Constitution of India. According to the learned counsel, the generation and distribution of electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g factor supportive of this inference" of the corporation being an instrumentality or agency of Government. If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority s case ( supra ), be an authority and, therefore, State within the meaning of the expression in article 12." (p. 496) 21. We are conscious of the facts that the above mentioned tests are not exhaustive, but are only illustrative; none of the above indicated tests individually is conclusive for reaching a conclusion, whether a particular body is a other authority or not. We shall not apply the tests to the facts of the case. Admittedly, the entire share capital of the respondent company is not held by any Government. Most of the share capital is held by various public limited companies. Only 20 per cent of the share capital is held by A.P.Transco which no doubt is an instrumentality of the State. Admittedly no financial assistance is received by the respondent company from the State. The respondent-company has no monopoly whatsoever nor is there any deep and pervasive State co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g appropriate legislation in that regard. 22. In the scheme of the distribution of legislative power between the Parliament and the various State Legislatures, the subject-matter of electricity is enumerated under Entry 38 of the List III of the 7th Schedule thereby making the said subject-matter amenable to the legislative competence of both the Parliament as well as the respective State Legislatures. The enacted law on this aspect is mainly contained in two Central enactments viz., Indian Electricity Act, 1910 and the Electricity Supply Act, 1948. Neither of the laws prohibits the activity of either generation or supply of electrical energy by persons other than the State. On the other hand, both the enactments recognise both the existence and the probability of coming into existence of generating companies in future. Generating Company is a defined expression under sub-section (2) of section 4A of the Electricity Supply Act, 1948 which reads as follows: "Generating company means a company registered under the Companies Act, 1956 and which has among its objects the establishment, operation and maintenance of generating stations." 23. This Court can safely take the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact stopped. 26. The learned counsel for the respondent, however, submitted though the A.P. Transco is also in arrears as alleged by the appellant therein that there is a bona fide dispute about the liability of such arrears raised by the A.P. Transco and the matter is pending consideration before a Committee constituted by the respondent company and therefore the resolution dated 16-3-2001 is not yet been implemented against the A.P. Transco so far depending upon the decision of the above mentioned Committees appropriate action would be taken in this regard. The learned counsel submitted that apart from the non-application of article 14 to the respondent company, factually A.P. Transco and the appellant herein do not stand on the same footing as the liability of the appellant is undisputed whereas the liability of the A.P. Transco is a subject-matter of the bona fide dispute which is being enquired into. We accept the submission made by the learned counsel for the respondent. We hold that there is no discriminatory application of the Resolution dated 16-3-2001. 27. Coming to the next submission that the decision of the respondent company to disallocate power to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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