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TMI Blog2015 (11) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... ther powers or functions which may be administrative or regulatory. In the light of above there can be no difficulty in appreciating that M/s. LANCO rightly appreciated the hurdle of limitation in its way when such an objection was taken by the appellant and it rightly chose to seek exclusion of the period it was pursuing arbitration proceeding before the High Court, on the basis of principles underlying Section 14 of the Limitation Act. Having considered submissions of the parties we find no merit in the contention advanced on behalf of appellant that the commission was justified in not excluding this period of about one year on the ground that it was not bona fide and in such facts APTEL should not have taken a contrary view. The view which we are going to take has been indicated by this Court in several judgments including M.P. Steel Corporation (2015 (4) TMI 849 - SUPREME COURT). But the point requires no debate in view of clear stipulation in explanation (a) to sub-section (3) of Section 14 of the Limitation Act which reads as follows: "Explanation - For the purposes of this section, - (a) in excluding the time during which a former civil proceeding was pending, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot lead to any inference as suggested on behalf of the appellant that it is not an income tax but some other tax which is levied under Section 115JB of the Income Tax Act. Hence we hold the claim for MAT covered by Article 3.8 of the PPA and payable as such when requisite conditions stand satisfied. - Civil Appeal No. 6036 of 2012, C. A. Nos. 6061 of 2012; 6138 of 2012; 9304 of 2013 and 6835 of 2015 - - - Dated:- 16-10-2015 - Vikramajit Sen And Shiva Kirti Singh, JJ. For the Petitioner : Mr. A. Subba Rao, Adv. Ms. Suadha Shankar, Adv. Mr. Rakesh K. Sharma, Adv For the Respondent : Mr. Sakya Singha Chaudhuri, Adv JUDGMENT Shiva Kirti Singh, J. 1. The leading matter - C.A.No.6036 of 2012 as well as C.A.No.6061 of 2012 are statutory appeals arising out of a common order dated 2.7.2012 passed by Appellate Tribunal for Electricity (for short, 'APTEL') whereby pleas under Section 14 of the Limitation Act, 1963 to explain the alleged delay in preferring claims by the common respondent - M/s. Lanco Kondapalli Power Ltd. (for brevity referred to as 'M/s. LANCO') a power generating company before the Andhra Pradesh Electricity Regulatory Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of claim for MAT. 3. Before adverting to the issues noticed above and the rival contentions, it will be useful to notice the essential facts relevant for deciding the issues. M/s. LANCO is engaged in the generation and sale of electricity. Its Registered Office is at Hyderabad and it has set up its power project at Kondapalli Industrial Development Area in Krishna District of Andhra Pradesh. A.P. Power Co-ordination Committee, the appellant no.1, as the name suggests, was constituted on 07.06.2005 to ensure coordination between the four distribution companies of Andhra Pradesh who are appellant nos.3 to 6. M/s. Transmission Corporation of Andhra Pradesh (APTRANSCO) is the second appellant. At the relevant time the appellant no.2 was engaged in procurement of power for the Distribution Companies. In the first phase of power sector reforms, Andhra Pradesh State Electricity Board was unbundled into Generation and Transmission Corporation and subsequently the four Distribution Companies were notified by the Government on 31.3.2000 on account of unbundling of the Transmission Corporation in the subsequent phase of reforms. 4. There is no dispute between the parties that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erabad under Section 11(4) of the Arbitration and Conciliation Act, 1996 seeking appointment of arbitrator for APTRANSCO so that the disputes raised by it could be resolved through arbitration. APTRANSCO contested the maintainability of arbitration proceedings on various grounds including Section 86(1)(f) of the Electricity Act, 2003. While the matter before the High Court was still pending, the scope and effect of Section 86(1)(f) of the Electricity Act was decided by a judgment of this Court dated March 13, 2008 in the case of Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. (2008) 4 SCC 755. This Court held that all disputes between the licencee such as the appellants and generating companies such as M/s. LANCO require adjudication only by the State Commission which is alone competent to either adjudicate the disputes or refer them for arbitration and to appoint arbitrator. It was clearly held that it is the State Commission or its nominee under Section 86(1)(f) of the Electricity Act, 2003 and not the Chief Justice or his nominee under Section 11 of the Arbitration and Conciliation Act, 1996 who will have the authority to appoint an arbitrator if it decides to refer the disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a concession by the counsel for the appellants, although in the written statement before the Commission the appellants had seriously contested such claim on merits. It is contended by Mr. V. Giri, learned senior counsel for the appellant that the concession was misconceived and unauthorized. Learned senior counsel for M/s. LANCO, Mr. Sundaram, fairly conceded that the issue relating to claim for reimbursement of MAT may be heard and decided by us on merits and accordingly the parties have been heard in detail on the merits of such claim for the entire period, i.e., from 2001 to 2012. But in case the claim of MAT for 2001-2005 is held by us to be barred by limitation, it will not be considered on merits. 8. Appearing for the appellants, learned senior advocate Mr. V. Giri pointed out that in the impugned order under appeal APTEL has not considered the claim of capacity charges on merits and therefore this Court is not required to go into facts for deciding the merits of bills for capacity charges. On the issue of limitation he contended that there was no issue raised before the Commission that bar of limitation as per Limitation Act is not applicable to the proceedings before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Company is engaged solely in the ownership, design, financing, construction, operation and maintenance of the Project and will not include tax reimbursements of the previous year. 5.5. - Supplementary Bills For payments due to the Company for reimbursement of taxes on income, incentives or taxes and duties levied on generation and/or sale of electricity, payments for periods of political Force Majeure affecting either Party or Non-Political Force Majeure affecting the Board or any other adjustments or payments due to the Company hereunder, the Company shall present a supplementary bill, in such form as may be mutually agreed upon by the Board and the Company, (duly supported by supporting data). Each supplementary bill shall be payable by the Board on the Due Date of Payment, except in case of supplementary bill for taxes on income. At least thirty (30) days prior to the date when income tax is required to be paid by the Company, the Company shall submit to the Board a supplementary bill for the same. This bill shall be payable by the Board within twenty-five (25) days of its presentation to the Board by the Company or at least five (5) days before the date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onomic effects on the Company during the period prior to the COD of the first Generating Unit or, as the case may be, such Tariff Year of any Changes in Law or Changes in Permits, based on an accounting conducted by an independent chartered accountant reasonably acceptable to the Board. If as a result of such accounting, the company suffers an increase in costs or a reduction in after-tax cash flow or any other net economic burden which it would not have experienced but for such changes in Law or Changes in Permits (taking into account the reasonable costs of financing of any capital improvement in the period prior to the COD of the first Generating Unit or, as the case may be, such Tariff Year), the aggregate economic affect of which exceeds the equivalent of Rupees three (3) crores per 100 MW or pro-rata for any part thereof during the period prior to the COD of the first generating unit and Rupees one (1) crore per 100 MW or pro-rata for any part thereof during the period after the COD of the first Generating Unit, during any Tariff Year (excluding cost adjustments in respect of Changes in Law or Changes in Permits from any prior period), the Company may notify the Board of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creased costs for the purposes of this Article. (d) As soon as practicable during the period prior to the COD of the first Generating Unit or any Tariff Year after the Company becomes aware of any Change in Law or Change in Permits which could reasonably be expected to give rise to an increase/reduction in costs or reduction/increase in after-tax cash flow pursuant to paragraph (a) and (b), the Company shall provide an interim notice thereof to the Board describing, to the extent possible, the expected effect on the costs and the cash flow of the Company. The Company shall consult with the Board regarding such increased expenditures and the Company shall use all reasonable efforts to implement the Board's recommendations, if any, to minimize such increased expenditures consistent with Prudent Utility Practices and the Company's obligations under this Agreement. If prior to the end of any Tariff year the Company demonstrates on the basis of a certification of its chartered accountant that any Change in Law or Change in Permits would result in the Company's being unable to meet its payment obligations to its lenders under the Financing Documents on a current basis, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion irrespective of the magnitude thereof, and the amount in dispute or whether such dispute would otherwise be considered justiciable or ripe for resolution by any court or arbitral tribunal. This Agreement and the rights and obligations of the Parties hereunder shall remain in full force and effect pending the award in such arbitration proceedings, which award shall determine whether and when termination of this Agreement if relevant shall become effective. 11. Although, we were taken through various other Articles of PPA but it is not imperative to reproduce all such provisions. Article 3.1 provides for capacity charge which is required to be computed as per Article 3.2 and is meant to be paid by the Board. This is in respect of the Cumulative Available Energy provided by the Project in respect of any tariff year, upto (but not exceeding) an amount calculated on the basis of Prescribed Plant Load factor. Since the issue of capacity charge is not required to be addressed by us on merits, further details need not detain us. Clause 3.8 has been read over again and again because it is of immense significance in deciding the issue relating to MAT. Article 5 contains various su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil Procedure, 1908 in respect of various matters such as summoning and enforcing the attendance of any person and examining him on oath; discovery and production of any document etc; receiving evidence on affidavit; requisitioning of any public record; issuing commission for the examination of witnesses; reviewing its decisions, directions and orders; and any other matter which may be prescribed by the Commission. The Commission shall also have powers to pass suitable interim order and authorize any suitable person to represent the interest of the consumers in the proceedings before it. Section 95 declares that all proceedings before the Commission shall be deemed to be judicial proceedings within the meaning of Sections 193 and 228 of the Indian Penal Code and it shall be deemed to be a Civil Court for the purposes of Sections 345 and 346 of the Code of Criminal Procedure, 1973. Section 158 is a solitary provision in Part XVI which provides for arbitration under the heading Dispute Resolution . According to Section 158, any matter directed to be determined by Arbitration, unless there is expressed provision to the contrary in the license of a licensee, shall be determined by su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;) rather Section 43 of the Arbitration Act shall govern the rights of the parties and it mandates that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in courts. It may however be noted here that in the case of PPN Power Generating Co. (P) Ltd. (supra) in para 65, the Court held that the Limitation Act would not be applicable in such matters for various reasons including Section 2(4) of the Arbitration Act which was extracted to highlight that sub-section (1) of Section 40, Sections 41 and 43 all in Part I of the Arbitration Act, would not apply to arbitration under any other enactment. Only rest of the Limitation Act would be applicable to the extent not inconsistent with the other enactment or any Rule made thereunder. On that basis in Paragraph 66 it was held that the provisions with regard to Limitation Act under Section 43 of the Arbitration Act would not be applicable to statutory arbitrations conducted under the Electricity Act, 2003. 16. In fairness to the submission of Mr. Giri, it is noted that in the PPN Power Generating Co. (P) Ltd.(supra), in Paragraphs 64 and 68, this Court was satisfied on facts itself that the principle of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on the date when recovery proceedings are undertaken. ..... In fact this Court looked to the scheme of the Kerala Act to come to a conclusion that amounts due are those amounts which the creditor could have recovered had he filed a suit. 18. It is noteworthy that besides drawing relevant inference from the provisions of the Kerala Act, in paragraph 11 the Court acted cautiously in interpreting the words amounts due in view of Article 14 of the Constitution. It expressed its views thus : ..... Moreover, such a wide interpretation of amounts due which destroys an important defence available to a debtor in a suit against him by the creditor, may attract Article 14 against the Act. It would be ironic if an Act for speedy recovery is held as enabling a creditor who has delayed recovery beyond the period of limitation to recover such delayed claims. In para 12 the Court referred to and relied upon judgment in the case of New Delhi Municipal Committee v. Kalu Ram (1976) 3 SCC 407 wherein this Court had similarly interpreted Section 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1958. The words arrears of rent payable were given a limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; at p.295: Is this right? What is 'Judicial power'? Their Lordships are of opinion that one of the best definitions is that given by Griffith C.J. in - Huddart, Parker Co. v. Moorehead, (1909) 8 CLR 330 at p.357 (B) where he says: 'I am of opinion that the words 'judicial power' as used in S.71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action . Their Lordships further enumerated at p.297 certain negative propositions in relation to this subject : 1. A tribunal is not necessarily a Court in this strict sense because it gives a final decision; 2. Nor because it hears witnesses on oath; 3. Nor because two or more contending parties appear before it between whom it has to decide; 4. Nor because it gives decisions which affect the rights of subjects; 5. Nor bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India (2000) 5 SCC 355. A Bench of two Judges considered the scope of the word Court occurring in Section 14 of the Limitation Act and held that any authority or tribunal having trappings of a court is covered because Court does not necessarily have to be a civil court. On such reasonings the appellate authority under Section 41 of Tamil Nadu Shops and Establishments Act was held to be a court. One must notice here only that the judgment in the case of P. Sarathy (supra) has been considered in a recent judgment of this Court rendered by a Bench of two Judges in the case of M.P. Steel Corporation v. Commissioner of Central Excise (2015) 7 SCC 58. In this case it was held that although the Limitation Act including Section 14 thereof would not apply to appeals filed before a quasi-judicial tribunal such as the Collector (Appeals) mentioned in Section 128 of the Customs Act, 1962 but the principles underlying Section 14 of the Limitation Act would nevertheless apply as they advance the cause of justice. The Court repelled the submission that Section 128 of the Customs Act excludes the application of the principles underlying Section 14 of the Limitation Act. In order to reach t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this country. The word Court was, therefore, held to include the consumer forums. In para 58 it was reiterated that in legislations like the Consumer Protection Act the word Court cannot be given a strict meaning. 22. In reply on this issue, learned senior advocate Mr. Sundaram took a frontal stand that Limitation Act does not apply to a proceeding before the Commission because it is not a court stricto-sensu. For this proposition he relied upon judgments in the case of PPN Power Generating Co. (P) Ltd. (supra) and M.P. Steel Corporation (supra). He however floated a suggestion that even when no period of limitation is applicable for initiating action before the Commission, if this Court finds it necessary and in the interest of justice, then a reasonable period may be indicated by this Court for the aforesaid purpose. He hastened to add that such reasonable period can only be as an illustration and not as a fixed period. According to him, a reasonable illustrative period indicated by the court, in practical application, can vary from case to case as per facts of each case. He also contended that even if a definite limitation period is found to be attracted, in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation is required to be respected by the Commission on the ground that there is no provision in the Electricity Act conferring additional rights upon a party moving the Commission for relief so as to claim even such reliefs which stand barred by limitation before the Civil Court or even for arbitral proceedings. The other ancillary issue required to be answered is - whether by virtue of provisions of the Electricity Act 2003 the Limitation Act has been made applicable to an action before the Commission by express provision or even by necessary intendment. 25. Before answering the aforesaid two issues and then adverting to the question whether principles of Section 14 were rightly applied by APTEL (in case any period of limitation is held to be attracted), it will be proper to note some relevant contentions advanced by learned senior advocate Mr. Jayant Bhushan who has appeared for some of the respondents. 26. Mr. Bhushan pointed out that Commission is a creature of Statute and hence it cannot reject a claim on the ground of limitation unless limitation is found to be applicable by virtue of the provisions of the Electricity Act 2003. According to him if Limitation Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned therein. For this purpose he relied upon a Constitution Bench judgment in the case of Bombay Dyeing Manufacturing Co. Ltd. v. The State of Bombay AIR 1958 SC 328. He sought to explain the Constitution Bench judgment in the case of M/s. Tilokchand and Motichand v. H.B. Munshi (1969) 1 SCC 110 by pointing out that delay and laches were held to be applicable to a petition under Article 32 of the Constitution of India for the reason that such jurisdiction was always recognized and held to be a discretionary one. 28. Coming back to the issues relating to limitation, in view of law noticed above and for the reasons noted in M.P. Steel Corporation (supra), we respectfully concur and hold that by itself the Limitation Act will not be applicable to the Commission under the Indian Electricity Act 2003 as the Commission is not a Court stricto sensu. Further stand of the respondents that the Commission being a statutory tribunal, cannot act beyond the four walls of the Electricity Act also does not brook any exception. In the case of PPN Power Generating Co. (P) Ltd. (supra) this Court examined the issue of limitation in a very summary manner and without referring to the relevant prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits a serious consideration. There is no possibility of any difference of opinion in accepting that on account of judgment of this Court in Gujarat Urja (supra) the Commission has been elevated to the status of a substitute for the Civil Court in respect of all disputes between the licencees and generating companies. Such dispute need not arise from the exercise of powers under the Electricity Act. Even claims or disputes arising purely out of contract like in the present case have to be either adjudicated by the Commission or the Commission itself has the discretion to refer the dispute for arbitration after exercising its power to nominate the arbitrator. It is in view of such far reaching judicial powers vested in the Commission that in the case of PPN Power Generating Co. (P) Ltd. (supra) this Court advised the State to exercise enabling power under Section 84(2) to appoint a person who is/has been a Judge of a High Court as Chairperson of the State Commission. In such a situation it falls for consideration whether the principle of law enunciated in State of Kerala v. V.R. Kalliyanikutty (supra) and in the case of New Delhi Municipal Committee v. Kalu Ram (supra) is attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice as well as possibility of discrimination. We have already extracted a part of paragraph 11 of the judgment in the case of State of Kerala v. V.R. Kalliyanikutty (supra) wherein Court considered the matter also in the light of Article 14 of the Constitution. In that case the possibility of Article 14 being attracted against the statute was highlighted to justify a particular interpretation as already noted. It was also observed that it would be ironic if in the name of speedy recovery contemplated by the statute, a creditor is enabled to recover claims beyond the period of limitation. In this context, it would be fair to infer that the special adjudicatory role envisaged under Section 86(1)(f) also appears to be for speedy resolution so that a vital developmental factor - electricity and its supply is not adversely affected by delay in adjudication of even ordinary civil disputes by the Civil Court. Evidently, in absence of any reason or justification the legislature did not contemplate to enable a creditor who has allowed the period of limitation to set in, to recover such delayed claims through the Commission. Hence we hold that a claim coming before the Commission cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument was advanced on behalf of appellant that after the judgment of this Court in Gujarat Urja (supra) on 13.3.2008, the continuance of the arbitral proceedings before the High Court at the instance of M/s. LANCO should not be accepted as bona fide and that the commission was justified in not excluding this period of about one year on the ground that it was not bona fide and in such facts APTEL should not have taken a contrary view. Having considered submissions of the parties we find no merit in the aforesaid contention advanced on behalf of appellant. The view which we are going to take has been indicated by this Court in several judgments including M.P. Steel Corporation (supra). But the point requires no debate in view of clear stipulation in explanation (a) to sub-section (3) of Section 14 of the Limitation Act. This explanation reads as follows: Explanation - For the purposes of this section, - (a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted........... The same conclusion is inevitable even on other relevant facts. The appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred by limitation. Thus the claim of MAT for entire concerned period that is from 2001-2012 will be covered by our decision on Merits of Claim relating to MAT. The argument of Mr. Giri that MAT cannot be covered by the provisions in Article 3.8 of the PPA providing for claims for taxes on income because the appellant had not foreseen such eventuality in view of the then prevailing tax regime under which income from such power projects stood exempted, is noticed only to be rejected. The entire phraseology used in Article 3.8 of the PPA leaves no manner of doubt that parties were aware that tax regime keeps changing and therefore any advance income tax payable for the income from the project only had to be reimbursed by the Board. As a successor of the Board the appellant cannot avoid the liability to reimburse advance income tax paid by the M/s. LANCO, on the ground that MAT was a new variety of tax concept introduced subsequently in which minimum tax became payable on the basis of mere book profits of even power generating companies. The argument that such tax is not on income from the project and therefore, not covered by Article 3.8 of the PPA is also found to be without any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commends itself to us because such change in Law relating to Income Tax does not require any additional claim to be raised by the power generating companies. There is no specific amount - or rate which is to be reimbursed by the Board. Rather, the entire advance income tax payable requires reimbursement on account of Article 3.8 of the PPA provided of course that the accounts are maintained in the manner required by the Agreement so that tax is only on the basis of income from the project. No such dispute has been raised in the present case. 37. The claim of the appellant that liability of MAT is on account of change in Law and therefore required M/s. LANCO to adopt the procedure for making claims under Article 11.4 of the PPA does not appeal to us for the aforesaid reasons. The entire stipulation in Article 11.4 of the PPA is in respect of additional or reduced expenditures or costs which have not been catered for and arise later due to change in Law. The burden on account of income tax as per Article 3.9 of the PPA cannot be treated as additional or reduced burden because the entire actual advance income tax payable for the project is required to be reimbursed by the Board. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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