Tata Power Company Ltd. vs Adani Electricity Mumbai Ltd. & Ors.

HELD: 1.1 The standby facility was made available to TPC in the event there was a failure of power in TPC’s generation of 1777 MW. BSES/REL used to purchase electricity from TPC between 29 % to 37 % from 1998 to 2006. The standby charges were factored into the tariff charged from its retail customers. The standby charges to the extent of supply were borne by BSES/REL for optimum supply from TPC when interconnectivity was provided at Borivali point as per the Government order. The dispute arose between TPC and BSES/REL as to whether BSES/REL entitlement to draw 275 MVA from TPC in the case of outage and failure of electricity supply, the charges which were required to be paid were over and above the charges that would be paid for energy actually drawn. TPC was paying an amount of Rs.24.75 crores per month-Rs.297 crores per annum to MSEB by way of standby charges which was built into the tariff. The said amount was recovered by TPC from its customers who in turn recovered it from their retail consumers. [Para 25][866-E-G]

1.2 The Government of Maharashtra formed a Committee to resolve the issue of quantum of standby charges required to be paid by BSES/REL to TPC. The Government of Maharashtra passed an order dated 19.1.1998 whereby stipulating a sum of Rs.3.5 crores per month should be paid by BSES/REL to TPC by way of standby charges. The decision was taken by the Committee inter alia considering the generation by TPC and MSEB. The order was based upon six factors-generation of TPC and MSEB; electricity supplied by TPC to BSES/REL as a consumer; TPC’s standby supply from MSEB; charges paid for said sub–standby supply by TPC to MSEB; the financial position of TPC and BSES/REL; and stability of better Mumbai grid. [Para 26][866-H; 867-A-B]

1.3 The main principles on the basis of which Agreement was to be reached between TPC and BSES/REL were settled. As per clause 2 of the Principles of Agreement, BSES/REL had to pay to TPC for 220 KV interconnection at Borivali at Rs.3.5 crores per month. The parties had agreed to cooperate in order to ensure that Government order dated 19.1.1998 is implemented in the spirit of it. A detailed power supply agreement was to be entered into by 21.4.1998. The agreement could not be executed as consensus with respect to several aspects could not be reached. The order dated 22.3.2000 has been set aside by the High Court, which order was not interfered with by this Court and the case was remitted for the decision to MERC, which is an expert body. The power was conferred upon the MERC vide notification dated 27.10.2000 under the provision of Section 22(2)(n) of Electricity Regulatory Commission Act, 1998, to adjudicate upon the disputes and differences between licensees and utilities. On 4.12.2000, BSES/REL had filed an application to MERC in respect of sharing of standby charges between BSES/REL and TPC. The prayers were made to regulate action and standby charges levied by them and to fix and determine the standby charges payable by them. [Para 27][867-C-F]

1.4 Ultimately, the APTEL by the impugned orders has decided the matter. The Chairman held that liability to be in proportion of 2:1 tariff, whereas Judicial Member has concurred with the Technical Member when Technical Member differed with the opinion of Chairman, but the fact remains that MERC, as well as the APTEL, concurrently have not accepted the case of the TPC that standby charges should be borne in ratio of 50:50. The decisions of MERC, as well as the Technical and Judicial Members, are found to be correct while terming ratio as 23:77 with respect to BSES/REL and TPC respectively.[Para 28] [867-F-G]

1.5 In view of the facts and circumstances of the case and, in particular, several factors were required to be taken into consideration, on that basis said figure has been worked out. It has also been considered that electricity used to be purchased by BSES/REL from TPC to the aforesaid extent and the standby charges used to be realised which were factored in the tariff, which liability was ultimately passed on to the retail consumers. Even when the Principles of Agreement have been reached as to standby charges though it was subject to revision basis was fixed which could not have been departed from, it was on consideration of several aspects. The ratio had been appropriately worked out in the most equitable manner by applying the level playing field. Considering the standby charges of Rs.24.75 crores recovered by MSEB from TPC with effect from 1.10.1996 and as per the Government order and Principles of Agreement Rs.3.5 crores was additionally being available and a difference of standby which was made to increase the liability Rs.24.75 crore pm to Rs.30.25 crores pm. Thus, the decision of the Technical and Judicial Members is found to be appropriate and reasonable while working out the percentage of the standby charges to be paid by BSES/REL to TPC for the period in question. [Para 29][867-H; 868-A-D]

1.6 The MERC directed sharing of standby charges payable to MSEB between TPC and BSES/REL on the basis of their respective peak load requirements and directed TPC to pay to BSES/REL a sum of Rs.315.30 crores within 15 days. The quantum of standby capacity is related to the larger unit size of the generation in either system. The majority opinion that standby facility provided by TPC was out of its own generating capacity and 90 percent of the times energy has been drawn by BSES/REL from TPC, is accepted. Thus, there is no justification for TPC to claim 50:50 percent sharing of the standby charges in the facts of this case on consideration of various factors the decision has been reached. [Para 31][870-G]

1.7 There was no stay on the order passed by the APTEL by this Court. The plea of non–implementation of the order taken by TPC is not understandable. It was only the bank guarantee which was submitted by TPC, in addition, to deposit of a sum of Rs.227 crores with the Registrar General of this Court. The implementation of the order of the APTEL would mean that the determination made by it has been acted upon and corresponding liability factored into tariff has been passed on the customers and actual consumers and realised from them since there was no such interim stay on implementation of the order. The submission that order of APTEL has already been worked out even otherwise it is found to be just and equitable is accepted. [Para 32][870-H; 871-A-B]

1.8 There is no question of applicability of Article 14 of the Constitution. As a matter of fact, what was agreed in the Principles of Agreement more amount than that has been ordered to be paid on the basis of principles of business equilibrium and other factors. [Para 33][871-C]

1.9 The order passed by Technical and Judicial Members of APTEL is upheld. The amount which is payable to REL deposited or secured by way of bank guarantee by TPC along with interest lying with the Registrar of this Court, be paid to the respondent company. [Para 35][871-E-F]

BSES Ltd. v. Tata Power Co. Ltd. (2004) 1 SCC

195 : [2003] 4 Suppl. SCR 932 ; Binani Zinc Ltd. v. Kerala State Electricity Board, (2009) 11 SCC 244 : [2009] 4 SCR 636 – referred to.