Electricity Act, 2003 – ss. 61, 62, 64 and 86 – Power Purchase Agreement(PPA) – Appellants-distribution companies (DISCOMS) were to purchase 100% power generated by respondent no.1HNPCL – O.P. No.21 of 2015 filed by HNPCL for determination of capital cost and O.P. No.19 of 2016 filed by appellants–DISCOMS for approval of PPA – However, on 4th January, 2018, appellantsDISCOMS filed IAs before the State Electricity Regulatory Commission for withdrawal of O.P. No.19 of 2016 and disposal of O.P. No.21 of 2015 – State Commission allowed withdrawal of O.P. No.19 of 2016 filed by appellants–DISCOMS and consequentially dismissed O.P. No.21 of 2015 filed by HNPCL – Appeal of respondent no.1-HNPCL allowed by Appellate Tribunal for Electricity (APTEL) which directed the State Electricity Regulatory Commission to dispose of O.P. No.21 of 2015 and O.P. No.19 of 2016 on merits – Correctness of – Held: APTEL rightly held that, on account of the assurance given by the State of Andhra Pradesh/APDISCOMS, HNPCL had altered its position and as such, it was not permissible for the appellants-DISCOMS to withdraw O.P. No.19 of 2016 – Conduct of appellants-DISCOMS would disentitle them to withdraw the application – Argument, that on account of increase of the capital cost of the project, the appellants–DISCOMS would be required to purchase power at much higher rate, also does not hold water since the State Electricity Regulatory Commission would only approve the cost as it would feel appropriate, as guided by the provisions u/s.61 of the Act of 2003 and the Regulations; and merely because, the cost of the project is estimated by HNPCL at a particular amount, the State Commission is not bound to accept the same – Further, perusal of s.64 of the Act of 2003 would reveal that even a Generating Company is entitled to make an application for determination of tariff u/s.62 of the Act of 2003 – As such, the State Commission was wholly unjustified in dismissing O.P. No.21 of 2015 filed by HNPCL – For reasons unknown, appellants-DISCOMS took a decision to resile from their earlier stand, due to which, not only the huge investment made by HNPCL would go in waste, but also valuable resources of the public including thousands of acres of land would go in waste – Appellants-DISCOMS, which are instrumentalities of the State, could not be permitted to change their decision at their whims and fancies and, particularly, when it was adversarial to the public interest and public good – The record clearly showed that the change in decision was arbitrary, irrational and unreasonable – IAs filed by appellants–DISCOMS, were acts, affecting public interest and public good, without there being any rational or reasonable basis for the same – Conduct of appellants– DISCOMS, deprecated – In any event, the impugned judgment of APTEL cannot be said to be prejudicial to the interests of any of the parties – What was done by APTEL was only to direct the State Electricity Regulatory Commission to dispose of the said two O.Ps on merits – Appeal dismissed with costs, quantified at Rs.5,00,000/- – State Electricity Regulatory Commission to decide the said two O.Ps, expeditiously, within six months.
Constitution of India – Arts.12 and 14 – Public Authority – State – Instrumentalities of the State – Held: Every action of a State is required to be guided by the touch-stone of non-arbitrariness, reasonableness and rationality – Every action of a State is equally required to be guided by public interest – Every holder of a public office is a trustee, whose highest duty is to the people of the country – The Public Authority is therefore required to exercise the powers only for the public good.
Dismissing the appeal, the Court
HELD: 1. The Appellate Tribunal for Electricity (APTEL) rightly held that, on account of the assurance given by the State of Andhra Pradesh/APDISCOMS, HNPCL had altered its position and as such, it was not permissible for the appellants-DISCOMS to withdraw O.P. No.19 of 2016. The grounds, which are sought to be urged in I.A. No.1 of 2018 in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015, were very much available when the appellants-DISCOMS had entered into MoA on 17th May, 2013 and the Continuation Agreement dated 28th April, 2016. [Para 79][226-C-E]
2. In any case, the conduct of the appellants–DISCOMS, in the present case, would disentitle them to withdraw the application. [Para 87][230--C-D]
3. Another argument, that on account of increase of the capital cost of the project, the appellants-DISCOMS would be required to purchase power at much higher rate, also does not hold water. The State Electricity Regulatory Commission while determining the tariff would be guided by various factors as are required to be taken into consideration in view of the provisions of Section 61 of the Electricity Act, 2003. In any event, the appellants–DISCOMS have themselves reserved their right to contest the correctness of the cost on every component at an appropriate stage before the State Commission. Merely because, the cost of the project is estimated by HNPCL at a particular amount, the State Commission is not bound to accept the same. The State Commission would only approve the cost as it would feel appropriate, as guided by the provisions under Section 61 of the Act of 2003 and the Regulations. In that view of the matter, the argument in this regard also, is without substance. [Para 88][230-D-H]
4. In any event, the State Commission totally erred in dismissing O.P. No.21 of 2015 filed by HNPCL. Perusal of Section
64 of the Act of 2003 would reveal that even a Generating Company is entitled to make an application for determination of tariff under Section 62 of the Act of 2003. As such, irrespective of the question, as to whether an application for withdrawal of O.P. No.19 of 2016 filed by the appellants-DISCOMS could have been entertained, the State Commission was wholly unjustified in dismissing O.P.No.21 of 2015 filed by HNPCL. In any case, in the facts of the present case and, particularly, taking into consideration the conduct of the appellants-DISCOMS, the APTEL rightly held that the appellants– DISCOMS could not have been permitted to withdraw O.P. No.19 of 2016. [Para 99][230-A-C]
5. The appellants–DISCOMS are instrumentalities of the State and as such, a State within the meaning of Article 12 of the Constitution of India. Every action of a State is required to be guided by the touch-stone of non-arbitrariness, reasonableness and rationality. Every action of a State is equally required to be guided by public interest. Every holder of a public office is a trustee, whose highest duty is to the people of the country. The Public Authority is therefore required to exercise the powers only for the public good. [Para 100][234-C-E]
6. The determination of the capital cost of the project and the rate of tariff at which the power has to be purchased would always be subject to regulatory control of the State Commission. What has been done by the APTEL is only directing the State Commission to determine the same. [Para 104][237-F-G]
7. The record would clearly reveal that from the year 2012 onwards till 4th January, 2018, it was the consistent stand of the State of Andhra Pradesh as well as the APDISCOMS that it would be purchasing 100% power generated from the project of HNPCL. Not only an application being O.P. No.21 of 2015 was filed by HNPCL for determination of capital cost, but also O.P. No.19 of 2016 was filed by the appellants-DISCOMS for grant of approval to the Continuation Agreement dated 28th April, 2016 with the Amended and Restated PPA of 1998. The matters were heard finally on 15th May, 2017 and closed for orders. For some unknown reasons, exclusively within the knowledge of the appellants–DISCOMS, things turned topsy-turvy between 15th May, 2017 and 4th January, 2018, on which date, the appellants – DISCOMS did a somersault and filed applications for withdrawal of O.P. No.19 of 2016 and disposal of O.P. No.21 of 2015. Every decision of the State is required to be guided by public interest and the power is to be exercised for public good. For reasons unknown, the appellants– DISCOMS took a decision to resile from their earlier stand, due to which, not only the huge investment made by HNPCL would go in waste, but also valuable resources of the public including thousands of acres of land would go in waste. The reasons /grounds, which are sought to be given in I.A. No. 1 of 2018 in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015, filed on 4th January, 2018, were very much available between 2011 till 15th May, 2017. It is not as if something new has emerged between 15th May, 2017 and 4th January, 2018, which would have entitled the appellants– DISCOMS to resile from their earlier stand. The appellants– DISCOMS could not be permitted to change the decision at their whims and fancies and, particularly, when it is adversarial to the public interest and public good. The record would clearly show that the change in decision is arbitrary, irrational and unreasonable. [Para 105][237-G-H; 238-A-E]
8. I.A. No.1 of 2018 in O.P. No.19 of 2016 and I.A. No.2 of 2018 in O.P. No.21 of 2015 filed by the appellants-DISCOMS, are acts, which have been done wrongfully and wilfully without reasonable and probable cause. The act is one, affecting public interest and public good, without there being any rational or reasonable basis for the same. [Para 107][239-D-E]
9. In any case, the impugned judgment of APTEL cannot be said to be of such a nature, which can be said to be prejudicial to the interests of any of the parties. What has been done by the APTEL is only to direct the State Commission to dispose of O.P. No.21 of 2015 filed for determination of capital cost and O.P. No.19 of 2016 filed for approval of Amended and Restated PPA (Continuation Agreement) on merits. On remand, the State Commission would be bound to take into consideration all the relevant factors and the contentions to be raised by both the parties before deciding the said O.Ps. [Para 109][239-F-G] Hulas Rai Baij Nath v. Firm K.B. Bass and Co. [1967] 3 SCR 886 – distinguished.
Arjun Singh v. Mohindra Kumar AIR 1964 SC 993 : [1964] 5 SCR 946; Tata Power Company Limited v. Reliance Energy Limited and others (2009) 16 SCC 659 : [2009] 9 SCR 625; Kumari Shrilekha Vidyarthi and others v. State of U.P. and others (1991) 1 SCC 212 : [1990] 1 Suppl. SCR 625; Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries (1993) 1 SCC
71 : [1992] 2 Suppl. SCR 322; Indian Oil Corporation Limited and others v. Shashi Prabha Shukla and another (2018) 12 SCC 85 : [2017] 13 SCR 268 and Kalabharati Advertising v. Hemant Vimalnath Narichania and others (2010) 9 SCC 437 : [2010] 10 SCR 971 – referred to.
Boal Quay Wharfingers Ltd. v. King’s Lynn Conservancy Board (1971) 1 WLR 1558 [Court of Appeal, England] – referred to.
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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