Electricity Act, 2003 – ss.86(1)(f) and ss.37, 42, 158 – Appellant has four high tension electricity connections for its units at Chanderiya, Debari, Aghucha and Dariba, for which four contracts with the respondent were entered into for purchase of electricity – Appellant also set up a captive power plant at Chanderiya – It entered into three open access agreements dtd.
10.03.05 with the respondent – Dispute arose as to the unscheduled interchange charges payable under Clauses 8 & 9 of the agreements – By orders passed by the Rajasthan Electricity Regulatory Commission, it stated that it will itself decide the dispute between the parties – However, later the Commission appointed Arbitrator u/s.86(1)(f) r/w s.158 – Inter alia, the Arbitrator struck down Clause 8(c) & 9 of the agreements, consequently, the unscheduled interchange charges would be billed as per the agreements earlier entered between the parties –Commercial Court dismissed the challenge to the Award – High Court while setting aside the award, held that the hat worn by the appellant, which contained all four units, was that of an open access consumer and not that of generating company and thus, s.86(1)(f) was not attracted – Held: If there is an inherent lack of jurisdiction, the plea can be taken up at any stage and also in collateral proceedings – Thus, difficult to countenance to the appellant ‘s argument that having consented, the respondent cannot now turn around and challenge the very appointment of the Arbitrator as being invalid and without jurisdiction– Further, in view of judgment of Supreme court in Gujarat Urja Vikas Nigam Ltd. case, the expression ‘and’ occurring in s.86(1)(f) must be read as ‘or’ – As pointed out in the judgment, the State Commission cannot both decide the dispute itself and also refer it to an Arbitrator – Otherwise also, reference of any dispute for arbitration can only be between the licensees and generating companies and not otherwise – High Court right in stating that the Arbitrator could not, in law, have been appointed by the State Commission u/s.86 – Award based on such appointment would be non est in law – However, the High Court did not stop with finding on this issue, but went on to discuss the merits of the Award – In case the appellant wishes to avail any other remedy in law, none of the observations made by the High Court will stand in its way – Interpretation of Statutes.
Disposing of the appeal, the Court
HELD: 1.1 It is settled law that if there is an inherent lack of jurisdiction, the plea can be taken up at any stage and also in collateral proceedings. Therefore, it is a little difficult to countenance the argument that having consented, the respondent cannot now turn around and challenge the very appointment of the Arbitrator as being invalid and without jurisdiction. Coming now to Section 86 of the Electricity Act, 2003, it is clear that the adjudication upon disputes can only be between licensees and generating companies and not between licensees and consumers, which is provided for in an open access situation by Section 42. [Paras 18, 20, 21][122-C, F-G]
1.2 Under the Open Access Regulations of 2004, clause 29, in particular, gives a three-tier hierarchy of challenge when it comes to disputes raised between distribution licensees and consumers in relation to matters qua open access. This is quite apart from the separate mechanism provided in Section 42(6) of the Electricity Act, where a representation for redressal of grievances may be made to the Ombudsman appointed or designated by the State Commission, which, as has been pointed out, has already been set up. What becomes clear on a reading of the judgment of the Supreme Court in Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. is that the expression ‘and’ occurring in Section 86(1)(f) must be read as ‘or’. But this is only because, as has been pointed out in the judgment, the State Commission cannot both decide the dispute itself and also refer it to an Arbitrator. Otherwise also, reference of any dispute for arbitration can only be between the licensees and generating companies and not otherwise. This being the case, the High Court is right in stating that the Arbitrator could not, in law, have been appointed by the State Commission under Section 86 of the Electricity Act. The Award based on such appointment would be non est in law. However, the High Court did not stop with a finding on this issue, but went on to discuss the merits of the Award. In case the appellant wishes to avail of any other remedy in law, none of the observations made by the High Court will stand in its way. [Paras 22, 23, 25-27][122-H; 123-A-B; 124-A-D]
Kiran Singh and Others v. Chaman Paswan and Others’ [1955] 1 SCR 117; Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. (2008) 4 SCC 755 : [2008] 4 SCR 822– relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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