Transmission Corporation of Andhra Pradesh Limited vs M/s Rain Calcining Limited & Others

Andhra Pradesh Electricity Reforms Act, 1998: Whether Government Orders issued on 18.11.1997 and 22.12.1998, by the Andhra Pradesh Government, extending specific incentives to the producers of electricity from non-conventional energy resources, are binding and Doctrine of Promissory Estoppel against the Government and Commission was bound to give effect to them – Held: Plea of promissory estoppel is not attracted, as there was no unequivocal promise – The Regulatory Commission had power of reviewing the tariff and incentives – There was no unequivocal commitment to the respondent/purchasers/generators/developers to bind the State for all times to come – There was no definite, unambiguous representation, hence plea of estoppel was not attracted.

Andhra Pradesh Electricity Reforms Act, 1998: Object of enactment – Discussed.

Andhra Pradesh Electricity Reforms Act, 1998: APTRANSCO – Constitution and functions – Discussed.

Administrative Law: Judicial review – Tariff determination by APERC (Commission) –Scope of interference – Held: Once the expert body has determined specific tariffs, it is not for the Court to interfere ordinarily in such matters – In the instant case, the determination of tariff by the Commission was proper and did not suffer from any infirmity or illegality – The Commission made an elaborate discussion for arriving at the figure – The recovery network charges, tariff structure, and the question of wheeling charges in cash or kind were also considered – Interference not called for.

Allowing the appeals, the Court

HELD:

1. IN RE: COMPETENCE OF APERC TO DETERMINE

WHEELING CHARGES

1.1 Section 11 of the Reforms Act, 1998 deals with the functions of the Commission. Under Section 11(1)(a), the Commission shall aid and advise in matters concerning electricity generation, transmission, distribution and supply in the State. Section 11(1)(b) empowers the Commission to regulate the working of the licensees and to promote their working in an efficient, economical, and equitable manner. The Commission under Section 11(1)(c) has the power to issue licences in accordance with the provisions of the Act. Section 11(1)(d) also empowers the Commission to promote efficiency, economy, and safety in the use of the electricity. Under Section 11(1)(e), the Commission has the power to regulate the purchase, distribution, supply, and utilization of electricity, the quality of service, the tariff, and charges payable. The wheeling charges are part of tariff, and the provisions of Section 11 are inclusive and primarily dealing with the generation, transmission, and distribution. These three processes suggest that Section 11 does include in its ken the power to fix the wheeling charges relating to the generation, transmission, distribution, supply, and utilization of electricity. The licensee is required to submit a calculation of annual expected aggregate revenue, and the Commission has the power to fix the tariff for the licensees that would include the licence f or transmission also. The Commission, while fixing the wheeling charges, has to act upon the settled principles as specified in the order and in consonance with the provisions contained in Sections 11, 15, and 26. [Paras 34, 35, 36] [509-F-H; 501-A-D-E]

Ashok Soap Factory v. Municipal Corporation of Delhi (1993) 2 SCC 37 : [1993] 1 SCR 124 ; Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board (1997) 7 SCC 251 : [1997] 3 Suppl. SCR 266 ; Oil and Natural Gas Commission v. Association of Natural Gas Consuming Industries of Gujarat, (1990) Supp. SCC 397 : [1990] SCR 157 ; Rohtas Industries Ltd. v. Chairman, Bihar State Electricity Board (1984) Supp. SCC 161 : [1984] SCR 59 – relied on.

1.2 The Andhra Pradesh Electricity Regulatory Commission (Business Rules of the Commission), Regulations, 1999 were framed in exercise of powers conferred by Section 9, Sub-Section 2 and Section 54, Sub-Section (2)(a) of the M/S RAIN CALCINING LTD. & OTHERS

Reforms Act, 1998 and they were amended by Regulations of 2000. The Regulations reflect a broad spectrum of powers and various functions relating to fixation of the tariff. As per Regulation 45-A of the Regulations, 2000, inserted by amendments to Chapter IV-A of the Conduct of Business Regulations, it is open to the Commission to fix a tariff. Under regulations, various agreements have also been amended, and there is plenary power under the regulations to prescribe the tariff and charges concerning Transmission and Bulk Supply or Distribution and Retail Supply as provided in Regulation 45-A(2). Under Regulation 45-A(8), it is clear that upon hearing the licensee and such other parties as the Commission considers appropriate and upon making such other inquiry, the Commission shall make an order and notify the licensee of its decision on the revenue calculations and tariff proposals, as provided in section 26(5) of the Reforms Act, 1998. The commission can exercise the power of fixation of such charges, which power is legislative. The statutory contracts have been superseded by the regulations which have been made. No estoppel is created. It was not the subject matter of policy reserved for the Government under section 12 of the Reforms Act, 1998. As per section 26(5), the exercise of fixation of charges can be done. There is no violation of principles of natural justice as the objections were invited, and the licensees were heard. There is no question of attracting the equitable principles of promissory estoppel, as there was no unequivocal promise in this case, and statutory provision can make inroad and supersede the contracts. [Paras 39, 45-47, 54] [502-D-E; 509-E-F; 512-D-H; 513-A; 516-A-B]

PTC India Limited v. Central Electricity Regulatory Commission, (2010) 4 SCC 603 : [2010] 3 SCR 609 – relied on.

Indian Aluminium Company v. Kerala State Electricity Board, (1975) 2 SCC 414 : [1976] 1 SCR 70 ; Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd., (1983) 3 SCC 379 ; Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh & Ors., (1979) 2 SCC

409 : [1979] 2 SCR 641 ; Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board & Ors., (1997) 7 SCC 251 : [1997] 3 Suppl. SCR 266 ; Andhra Pradesh Electricity Regulatory Commission v. R.V.K. Energy Private Limited & Anr., (2008) 17 SCC

769 : [2008] 9 SCR 579 ; Binani Zinc Limited v. Kerala State Electricity Board & Ors., (2009) 11 SCC

244 : [2009] 4 SCR 636 ; Adani Power (Mundra) Ltd. v. Gujarat Electricity Regulatory Commission & Ors. AIR 2019 SC 3397 – held inapplicable.

Karnataka Power Transmission Corporation Ltd. v. Amalgamated Electricity Co. Ltd., (2001) 1 SCC 586 : [2000] 5 Suppl. SCR 695 – Distinguished.

1.3 The High Court could not have interfered with the findings on merits taken by the experts without entering into the various aspects considered by the Commission. The High Court has not gone into various reasons, and the details considered by the Commission and once the expert body has determined specific tariffs, it is not for the courts to interfere ordinarily in such matters. The determination is proper and does not suffer from any infirmity or illegality. The Commission has made an elaborate discussion for arriving at the figure. The recovery network charges, tariff structure, and the question of wheeling charges in cash or kind have also been considered. [Para 61] [519-B-D]

1.4 The use of the system cannot be isolated from losses in the system as they form an integral part of the system. All persons using the system should bear the system losses, whether technical or non-technical. Incidentally, the terms of a licence issued by APTRANSCO and DISCOMS specifically refer to deliver such electricity, adjust losses of electricity to a designated point. Technical losses in the system to be taken into account as these are also an integral part of the system. It is an integrated system where the electricity is supplied on displacement basis rather than direct conveyance of the particular electricity which is generated, the technical losses up to the voltage level at which the electricity is delivered along cannot be measured. The technical losses of the total system need to be taken into account as it is impossible to determine from which source electricity is being supplied to which M/S RAIN CALCINING LTD. & OTHERS

particular customer. The electricity from all sources gets combined in the system and loses its identity. As investment in the system has also been made, it was evident that requisite charges have to be paid. [Para 62] [519-E-G]

2. IN RE : GRID SUPPORT CHARGES

Grid Code is the basis for levy of the Grid Support Charges, which came to be approved by the Commission on 26.5.2001. The same is also reflected in the impugned order. Thus, in case of installation of another CPP, that would be an additional load on the grid, and there is no embargo for setting up additional grid CPP in the form of expansion as grid acts as cushioning. Under section 11 read with section 26 of the Reforms Act, 1998, all fixed charges under the distribution and Grid Support Charges are leviable only at the instance of a distribution company, and the Commission has the powers to determine it. In the agreements also there is a power where the Board could have fixed the Grid Support Charge unilaterally, but because of Reforms Act, 1998 came to be enacted, the application was filed in the Commission. After that, the Commission has passed the order in accordance with the law. There is no fault in the same. Thus, the order of the Commission concerning the Grid Support Charges is upheld. [Para 64] [520-C-F]

3. IN RE : INCENTIVES TO NON-CONVENTIONAL

ENERGY

3.1 The Government Order dated 18.11.1997, encourages renewable energy/non-conventional energy sources. The Government decided to provide specific incentives. The Government issued another GO MS No.112 dated 22.12.1998, making precise clarification that the benefits shall be available only to the power projects where fuel used is from nonconventional energy sources, which are of the nature of renewable sources of energy. The Scheme shall be watched for three years. After that, the State Electricity Board shall come up with suitable proposals for the continuance of incentives in the present form or modified form. [Paras 66-67] [521-B-H; 522A]

3.2 The Commission had passed the tariff orders dated 22.3.2005 and 23.3.2006 for the years 2004-05, 2005-06, and 2006-09. The APTEL was not correct in allowing the appeals and holding that effect of the policy decisions dated 18.11.1997 and 22.12.1998, which had a statutory flavor, had not been taken away by the provisions contained in the Electricity Act, 2003 and that the Doctrine of Promissory Estoppel is attracted, though the Commission has the power to regulate wheeling charges. To consider the applicability of Promissory Estoppel, it has to be seen whether these Government Orders contained an unequivocal commitment to extend benefits. On the contrary, the benefit was confined only to three years. The Commission under the provisions of the Reforms Act, 1998 extended it from time to time and the last such extension came to an end on 28.7.2001. The Commission decided not to extend the benefit by the impugned order determining the tariff. [Paras 68, 69] [522-B-F]

3.3 This Court in Transmission Corporation of Andhra Pradesh Limited case considered G.O. MS dated 18.11.1997 and 22.12.1998, in which APERC undertook the review of tariff applicable to the producers of electricity from non-conventional energy resources. In the year 2003, the Commission undertook a further review of the tariff. The Commission by order dated 20.3.2004, reduced the amount of tariffs. The Regulatory Commission had power of reviewing the tariff and incentives. There was no unequivocal commitment to the respondent/purchasers/ generators/ developers to bind the State for all times to come. There was no definite, unambiguous representation, hence plea of estoppel was not attracted. [Para 70] [522-G-H; 523-C-D]

3.4 Section 65 of the Electricity Act, 2003, provides that if State Government requires grant of any subsidy to any consumer in the tariff determined by the State Commission under Section 62, the State Government shall, notwithstanding, any direction which may be given under Section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person affected by the grant of subsidy in the manner the State Commission may direct. Subsidy/incentive is M/S RAIN CALCINING LTD. & OTHERS

governed by Section 65, and the Government has not issued any such direction to continue the incentives in the form of subsidy. It was open to the Government to do so because of the order passed by the Commission, but it has not extended such benefit. No command can be given to State to grant subsidy. Thus, the order of APTEL based on the Doctrine of Promissory Estoppel for continuing the benefit of Government Orders dated 18.11.1997 and 22.12.1998, cannot be said to be in accordance with the law. [Paras 71, 72] [526-B-E]

Transmission Corporation of Andhra Pradesh Limited & another v. Sai Renewable Power Private Limited & others, (2011) 11 SCC 34 : [ 2010] 8 SCR 636 – relied on

K. Ramanathan v. State of Tamil Nadu, AIR 1985 SC

660 : (1985) 2 SCC 116 : [1985] 2 SCR 1028 ; V.S. Rice and Oil Mills v. State of Andhra Pradesh AIR 1964 SC 1781 : [ 1964] SCR 456 ; Deepak Theatre, Dhuri v. State of Punjab, AIR 1992 SC 1519 ; D.K. Trivedi & Sons v. State of Gujarat, AIR 1986 SC 1323 : 1986 SCR 479 – referred to