2014 Supreme(SC) 272

SUPREME COURT OF INDIA
Surinder Singh Nijjar, A.K.Sikri, JJ.
T.N. Generation & Distbn. Corpn. Ltd. – Appellant
VERSUS
PPN power Gen. Co. Pvt. Ltd. – Respondent
CIVIL APPEAL NO. 4126 OF 2013
Decided On : 04 – 04 – 2014

IMPORTANT POINTS
State Electricity Regulatory Commission is not bound to refer the dispute to arbitration.
Electricity Act, 2003 bars application of Arbitration and Conciliation Act, 1996.
Chairperson of the State Electricity Regulatory Commission should be a sitting or retired High Court Judge.

Headnote:(a) Electricity Act, 2003 – Section 86 – State Commission may adjudicate the dispute itself or refer it to arbitration – In its discretion it may decline to refer the dispute to arbitration. (Para 34)

       (2008) 4 SCC 755 – Relied upon

       Appeal No. 49 of 2010 (APTEL) – Referred

       (b) Electricity Act, 2003 – Sections 86(1)(f), 174 and 175 – Provides a special manner making reference to arbitration – Hence by implication all other methods are barred – Arbitration and Conciliation Act 1996 is not applicable – Section 174 prevails over section 175 and hence State Commission is not bound to refer the dispute to arbitration. (Para 38)

       (2008) 4 SCC 755 – Relied upon

       (c) Electricity Act, 2003 – Section 111 – Appeal to Appellate Tribunal (APTEL) – Open to APTEL to examine whether State Commission exercised the discretion in referring the matter to arbitration or not in accordance – APTEL exercises jurisdiction over the State Commission by way of a First Appeal – Therefore, it is bound to examine if the decisions rendered by the State Commission are arbitrary, unreasonable or perverse. (Para 39)

       (d) Electricity Act, 2003 – Section 84(2) – Judicial functions – State Electricity Regulatory Commission – Disputes not fairly relative to tariff fixation or the advisory and recommendatory functions of the State Commission – Ought to be adjudicated by a Judicial Member – Chairperson should be a sitting or retired High Court Judge. (Para 40, 43, 45)

       1992 Supp.(2) SCC 651; (1962) 2 SCR 339; (2010) 11 SCC 1 – Relied upon

       (1986) 4 SCC 537; (2005) 2 SCC 431; (1987) 1 SCC 124; (1964) 6 SCR 261; (1998) 4 SCC 100 – Referred

       (e) Administration of Justice – Acquiescence – Appellant submitting to jurisdiction of State Commission – Filing written statement – Lis decided by the Commission – Not open to Appellants to question jurisdiction of the Commission before the APTEL or the Supreme Court. (Para 47)

       (f) Arbitration and Conciliation Act, 1996 – Section 2(4) and 43 – Section 43 will not be applicable to statutory arbitration conducted under Electricity Act, 2003 – Appellant taking a plea for referring the dispute to arbitration but participating in the proceedings, contesting the claim of the respondents on merits by filing written statement – Appellant not filing application u/s 8 or 45 of the Act, nor making any prayer for stay of proceedings – Now cannot raise plea of failure of State Commission to refer the dispute to arbitration or question of limitation for arbitration. (Para 50)

       (1994) 2 SCC 155; (2011) 5 SCC 532 – Relied upon

       (2008) 7 SCC 169; (2008) 4 SCC 755 – Impliedly relied upon

       (2000) 2 SCC 628 – Referred

       (g) Arbitration and Conciliation Act, 1996 – Part I and Article 16 of the PPA – Article 1616(2)(h) of the PPA, specifically excepting applicability of the Arbitration Act, 1996 and the Arbitration Act of 1940 – Article 16(2) mandating arbitration to be conducted in accordance with the ICC Rules whereunder ICC Court of Arbitration appoints Arbitral Tribunal – Article 16.2(e) providing the seat of arbitration to be in London – This the Agreement an international arbitration agreement – Article 17(8) providing that laws of England shall govern the validity, interpretation, construction, performance and the enforcement of the provision contained in Article 16(2) – Applicability of Arbitration Act, 1996 totally ruled out by the parties. (Para 52)

       (2002) 4 SCC 105; (2012) 9 SCC 552 – Relied upon

       (h) Power Purchase agreement – Article 10.6 – Appellant obliged to pay full amount of monthly invoice, subject to annual reconciliation, even if disputed – Appellant not making full payment but only substantial payment – Claiming 2.5% rebate as per Government of India instructions – Not tenable. (Para 55 – 57)

       (2002) 1 SCC 367; (2011) 8 SCC 161 – Relied upon

       Facts of the case:

       The respondent, a generating company, has entered into a Power Purchase Agreement (PPA) with the appellant for the supply of the entire Electricity to be generated by the respondent for a period of 30 years. The respondent commenced commercial operations on 26th April, 2001.

       Both parties were dissatisfied with accounting details provided by the other.

       Since the dispute was not resolved, the respondent filed the Dispute Resolution petition before the State commission, seeking a direction to the appellant to make a payment of sum of Rs. 1,89,91,17,264 being a sum due as on 19th March, 2009, under the invoices raised under the PPA and interest thereon in terms of Article 10.6 of the PPA from the due date till the date of actual payment.

       State Commission allowed the petition filed by the respondent for refund of the excess rebate availed by the appellant contrary to the terms of PPA and also ordered the respondent to redraw the monthly invoices in accordance with the directions issued by the State Commission. It also held that the appellant is liable to pay interest to the respondent in terms of Clause 10.6 of the PPA till payment. Conversely, if the appellant has made excess payment against each monthly invoice compared to the corresponding redrawn monthly invoice, the respondent is liable to pay interest in terms of Article 10.6 of the PPA. The rebate would be admissible to the appellant, if the redrawn monthly invoice and the original payment made by the appellant against the invoice of that month matches or if the appellant has made excess payment, the respondents were directed to redraw the annual invoice for 2001 – 2002, 2002 – 2003, 2003 – 2004, 2004 – 2005, 2005 – 2006 and 2006 – 2007, as at September of each year to capture the gains to the appellant on account of lower interest rates and gains to the respondent on account of higher floating rate. Certain other directions were also issued. The petition was accordingly disposed of.

       Aggrieved by the aforesaid directions, the appellant filed Appeal before the APTEL.

       APTEL has held that under Article 10.2(a), 10.2(b)(i) and 10.2(e), the appellant is obliged to pay full amount of the invoice within the due date to be eligible for the rebate of 2.5% or 1% as the case may be. Admittedly, the appellant neither paid the full amount for every invoice nor raised the dispute within one year. The appellant was held to be not eligible for rebate for reduction of the invoice funds. It also gave certain directions.

       Finding of the Court:

       There is no merit in the appeal.