1. Dispute concerning the legality of wheeling charges, grid support charges, and the withdrawal of incentives for non-conventional energy sources under the Andhra Pradesh Electricity Reforms Act, 1998. (Para 1 , 7 , 12 , 15 , 21 )
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2019 Supreme(SC) 1311
SUPREME COURT OF INDIA
Arun Mishra, M.R. Shah, B.R. Gavai, JJ.
TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED – APPELLANT
VERSUS
M/S RAIN CALCINING LIMITED & OTHERS – RESPONDENTS
CIVIL APPEAL NOS. 4569, 5085, 5084, 5052, 5083, 5079, 5057, 5053, 5066, 5064, 5068, 5054, 5071, 5056, 5077, 5063, 5055, 5080, 5062, 5073, 5069, 5081, 5076, 5059, 5065, 5067, 5075, 5058, 5082, 5061, 5072, 5070, 5074, 5060, 5078, 7093, 7103, 7085, 7086, 7080, 7090, 7079, 7084, 7088, 7104, 7091, 7089, 7041, 7083, 7092, 7087, 7042, 7102, 7043-7078, 8969, 8970, 8971, 8974, 8978, 8972, 8976, 8975, 8977 & 10125-10132 of 2003 With CIVIL APPEAL NO. 1945 OF 2004 AND CIVIL APPEAL NOS. 1946-1947 OF 2004 AND CIVIL APPEAL NOS.7029-7062 OF 2008
Decided On : 29-11-2019
Important Points
IMPORTANT POINTS
Regulatory powers are extensive and they include whatever needs to be done for achieving the objects and purposes of the Act.
Commission is empowered to fix wheeling charges.
Regulations made u/s 178 of Electricity Act, 2003 intervene and override existing contracts between regulated entities.
High Court could not have interfered with the findings of experts on merits.
Regulatory powers are extensive and they include whatever needs to be done for achieving the objects and purposes of the Act.
Commission is empowered to fix wheeling charges.
Regulations made u/s 178 of Electricity Act, 2003 intervene and override existing contracts between regulated entities.
High Court could not have interfered with the findings of experts on merits.
Subject
Energy Law - Electricity Regulation & Tariff Determination
Act Referred
ANDHRA PRADESH ELECTRICITY REFORM ACT: S.12, S.15(1), S.26(1), S.54(k), S.56(iii)(vi)
ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION BUSINESS RULES OF THE COMMISSION REGULATIONS: Reg.45(a), Reg.45(b), Reg.45(a)(2)
COMPANIES ACT: S.394(2)
CONSTITUTION OF INDIA: Art.226, Art.19(1)(f), Art.254
ELECTRICITY ACT: S.62, S.111, S.86, S.82, S.61, S.178, S.79(1), S.12(3), S.27(1)
ELECTRICITY REGULATORY COMMISSION ACT: S.22(1)(b)
ELECTRICITY REGULATORY COMMISSIONS ACT: S.17
ELECTRICITY SUPPLY ACT: S.57(a), S.78(a)
ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION BUSINESS RULES OF THE COMMISSION REGULATIONS: Reg.45(a), Reg.45(b), Reg.45(a)(2)
COMPANIES ACT: S.394(2)
CONSTITUTION OF INDIA: Art.226, Art.19(1)(f), Art.254
ELECTRICITY ACT: S.62, S.111, S.86, S.82, S.61, S.178, S.79(1), S.12(3), S.27(1)
ELECTRICITY REGULATORY COMMISSION ACT: S.22(1)(b)
ELECTRICITY REGULATORY COMMISSIONS ACT: S.17
ELECTRICITY SUPPLY ACT: S.57(a), S.78(a)
Headnote
(a) Reforms Act, 1998 - Section 11(1) r/w sections 14 and 15 - Determination of wheeling charges - Tariff fixation - Legislative function - APERC exercises the powers of a regulator - Such powers are extensive and they include whatever needs to be done for achieving the objects and purposes of the Act - Wheeling charges being part of tariff, and the provisions of Section 11 being inclusive and primarily dealing with the generation, transmission, and distribution - Held, Section 11 does include the power to fix the wheeling charges relating to the generation, transmission, distribution, supply, and utilization of electricity. (Para 29, 34, 35, 38)
(b) Electricity Act, 2003 - Section 178 - Empowering Central Commission to make regulations - Such Regulation intervenes and overrides existing contracts between regulated entities - However, fixation of tariff not dependent upon framing of regulation. (Para 41)
(c) Conduct of Business Regulations, 2000 - Regulation 45-A r/w section 26(5), Reforms Act, 1998- It is open to the Commission to fix a tariff - Commission having plenary power to prescribe the tariff and charges concerning Transmission and Bulk Supply or Distribution and Retail Supply - No estoppel is created against Commission in respect of concluded contracts. (Para 45, 46, 47, 49)
(d) Promissory estoppel - There is no question of promissory estoppel as regards fixation of wheeling charges. (Para 54)
(e) Interpretation of statute - Repugnancy - Question of repugnancy of Reforms Act, 1998 raised - Validity of no provision of the Act challenged - The question not raised before High Court - Cannot be raised before Supreme Court. (Para 55)
(f) Interpretation - Agreement - Clauses in an agreement ought to be given a plain, literal, and grammatical meaning of the expression - However, provisions of the Reforms Act, 1998 clearly empower the Commission to determine the charges. (Para 57)
(g) Licence No.1/2000 to APTRANSCO - Clause 20 r/w 22 - Incumbent upon APTRANSCO to refer table of tariffs or even system charges/losses incurred under the system - There being integration between transmission and distribution systems it is not joint application but an obligation under the licence, causing no prejudice - Joint application held maintainable. (Para 58, 59)
(h) Reforms Act, 1998 - Section 11(1) - Wheeling charges - Determined by experts - High Court could not have interfered with the findings on merits - That too, without entering into the various aspects considered by the Commission. (Para 61, 62)
(i) Section 11(1) - Grid support charges - No Government Order or Incentive Scheme governing Grid Support Charges - Grid Code as the basis for levy of Grid Support Charges approved by the Commission - No fault. (Para 64)
(j) Electricity Act, 2003 - Section 62 - Government Orders issued on 18.11.1997 and 22.12.1998 extending specific incentives to producers of electricity from non-conventional energy resources -
Scheme confined to three years - No unequivocal commitment to extend the benefits - After three years State Electricity Board required to submit suitable proposals for continuance of incentives in the present form or modified form - Commission extending benefits till 2001 and thereafter while fixing tariff deciding not to extend the benefits - Doctrine of promissory estoppel not attracted. (Para 69, 71)
Facts of the case:
There are three batches of appeals.
In the first batch of appeals, the question arises for consideration concerning the levy of wheeling charges by the appellant – Transmission Corporation of Andhra Pradesh Limited (APTRANSCO). In the second batch of appeals, the question arises for consideration regarding the competence of the APTRANSCO to levy the grid support charges. Admittedly, the outcome of the third batch of appeals depends on the outcome of the first batch of appeals. In the third batch of appeals, the question arises for consideration as to continuance of incentives in respect of wheeling charges granted as per Government Order issued during the year 1997-1998, had to be continued, and whether Commission had the power to review them.
The APTRANSCO proposed a wheeling charge of Rs.1 per Kwh for energy it transmitted through its network. On 24.3.2002, the Commission determined that the wheeling charges for the year 2002-2003 effective from 1.4.2002 would be Paise 50 per Kwh for energy it transmitted through its network. Besides, wheeling charges of 28.4 percent of energy input by the project developer into the licensee’s grid being the system loss was also to be factored. The order of the Commission was questioned before the High Court and the High Court allowed the appeal, setting aside the order dated 24.3.2002 of the Commission.
In the second batch of appeals The Commission held that grid support charges would be payable at the rate of 50 percent of prevailing demand charges on the differential of CPP capacity and CMD. The High Court has set aside the order passed by the Commission.
Finding of the Court:
Regulatory powers are extensive and they include whatever needs to be done for achieving the objects and purposes of the Act.
Commission is empowered to fix wheeling charges.
Regulations made u/s 178 of Electricity Act, 2003 intervene and override existing contracts between regulated entities.
High Court could not have interfered with the findings of experts on merits.
Result: Appeals allowed.
Legal Category Hierarchy
- administrative law
- energy law
- contract law
Advocates Appeared:
For the parties :C.S. Vaidyanathan, Manu Nair, Kuber Dewan, Suvarna Kashyap, S. S. Shroff, Nishant Sharma, Rakesh K. Sharma, Nishant Sharma, Rakesh K. Sharma, K. V. Mohan, K.V. Balakrishnan, M/s. Lawyers’ Knit & Co., Vishwajit Singh, Jayati Parasher, Rajan Narain, Sridhar Potaraju, V.R.N. Prasanth, Shweta Parihar, Shiwani Tushir, G. Usha Sri, Vishnu Thulasi Menon, E. C. Agrawala, G. Ramakrishna Prasad, Raunak Jain, A. V. Rangam, Stuti Krishn, V. G. Pragasam, D. Bharathi Reddy, Y. Raja Gopala Rao, Nikhil Swami, Divya Swami, Prabha Swami, Vikas Mehta, Venkateswara Rao Anumolu, Umesh Kumar Khaitan, K. Mamatha Choudary, Gopal Choudhary, Liz Mathew, Sonali Jain, M/s. MCLM & Co. Pratap Venugopal, Surekha Raman, Akhil Abraham Roy, Vijay Valson, M/s. K.J. John and Co. K.J. John, K.K. Mohan, A. Subba Rao, A. D. N. Rao, Venkatesh Rao, Rahul Mishra, Avni Sharma, Nishant Sharma, Rakesh Kumar Sharma, Matrugupta Mishra, Pratiksha Chaturvedi, Sharmila Upadhyay, Advocates
For the parties :C.S. Vaidyanathan, Manu Nair, Kuber Dewan, Suvarna Kashyap, S. S. Shroff, Nishant Sharma, Rakesh K. Sharma, Nishant Sharma, Rakesh K. Sharma, K. V. Mohan, K.V. Balakrishnan, M/s. Lawyers’ Knit & Co., Vishwajit Singh, Jayati Parasher, Rajan Narain, Sridhar Potaraju, V.R.N. Prasanth, Shweta Parihar, Shiwani Tushir, G. Usha Sri, Vishnu Thulasi Menon, E. C. Agrawala, G. Ramakrishna Prasad, Raunak Jain, A. V. Rangam, Stuti Krishn, V. G. Pragasam, D. Bharathi Reddy, Y. Raja Gopala Rao, Nikhil Swami, Divya Swami, Prabha Swami, Vikas Mehta, Venkateswara Rao Anumolu, Umesh Kumar Khaitan, K. Mamatha Choudary, Gopal Choudhary, Liz Mathew, Sonali Jain, M/s. MCLM & Co. Pratap Venugopal, Surekha Raman, Akhil Abraham Roy, Vijay Valson, M/s. K.J. John and Co. K.J. John, K.K. Mohan, A. Subba Rao, A. D. N. Rao, Venkatesh Rao, Rahul Mishra, Avni Sharma, Nishant Sharma, Rakesh Kumar Sharma, Matrugupta Mishra, Pratiksha Chaturvedi, Sharmila Upadhyay, Advocates
Table of Contents
2. Respondents challenge the Commission's jurisdiction to fix wheeling charges and argue that existing contracts and government incentives are binding under the doctrine of promissory estoppel. (Para 31 , 32 , 33 , 68 )
3. The Commission acts as a regulator with legislative powers to fix tariffs; regulations can supersede statutory contracts; incentives were subject to review and not absolute promises. (Para 28 , 29 , 34 , 35 , 36 , 41 , 47 , 61 , 62 , 70 , 71 )
4. Regulatory power to determine tariffs is legislative in character and, when exercised through regulations, can override existing contractual relationships between regulated entities. (Para 41 , 47 )
5. Appeals allowed — High Court and APTEL orders set aside — APERC orders regarding wheeling charges, grid support charges, and incentive reviews restored. (Para 73 )
6. Does a State Regulatory Commission have the power to determine wheeling charges under the Reforms Act, 1998?
Yes, the Commission has extensive regulatory powers to regulate transmission and determine tariffs, which include wheeling charges, as part of its function to ensure efficient, economical, and equitable electricity supply. (Para 34 , 35 , 36 , 38 )
7. Can regulatory tariff determinations override existing contracts between electricity licensees and generators?
Yes, tariff fixation is a legislative function. Regulations framed by the Commission as subordinate legislation can intervene in and override existing contractual relationships to align them with the statutory regulatory framework. (Para 41 , 47 )
8. Does the doctrine of promissory estoppel prevent a Regulatory Commission from reviewing or withdrawing government-granted energy incentives?
No, if the incentives were subject to review or lacked an unequivocal, unambiguous commitment to continue indefinitely, promissory estoppel is not attracted, and the Commission retains the power to review tariffs. (Para 69 , 70 , 71 )
9. Is the levy of grid support charges on consumers with captive power plants legally permissible?
Yes, grid support charges are permissible as they compensate the utility for maintaining the grid which acts as a buffer for captive plants, falling under the Commission's regulatory powers. (Para 63 , 64 )
JUDGMENT
ARUN MISHRA, J.
1. There are three batches of appeals; most of the questions are common, which arise for consideration. In the first batch of appeals, the question arises for consideration concerning the levy of wheeling charges by the appellant – Transmission Corporation of Andhra Pradesh Limited (APTRANSCO). In the second batch of appeals, the question arises for consideration regarding the competence of the APTRANSCO to levy the grid support charges. Admittedly, the outcome of the third batch of appeals depends on the outcome of the first batch of appeals. In the third batch of appeals, the question arises for consideration as to continuance of incentives in respect of wheeling charges granted as per Government Order issued during the year 1997-1998, had to be continued, and whether Commission had the power to review them.
2. After independence, the electricity generation, distribution and transmission, and other related activities were undertaken by the Andhra Pradesh State Electricity Board (APSEB). After the amendment in 1991 in Electricity (Supply) Act, 1948 (Act of 1948), when liberalization was made in the electricity sector, then APSEB entered into agreements with Private Generators.
3. The Andhra Pradesh State Legislature enacted Andhra Pradesh Electricity Reforms Act, 1998 (the Reforms Act, 1998). The Governor reserved the same for the assent of the President under Article 254 of the Constitution. The Andhra Pradesh Electricity Regulatory Commission (APERC) was constituted under the Reforms Act, 1998 on 31.3.1999, which started functioning with effect from 3.4.1999.
4. Under the provisions of the said Act, the transmission and distribution and generation were separated, and APTRANSCO came to be established. The Act received the Presidential assent on 21.10.1998 and was published in the Official Gazette on 29.10.1998. On 1.2.1999, the Reforms Act, 1998, was brought into force, and APTRANSCO succeeded APSEB in regards to transmission, distribution, and supply of electricity.
5. The APERC granted License No.1/2000 to APTRANSCO on 31.1.2000, to deal with transmission and bulk supply of electricity. License No.2/2000 was given to APDISCOMS for carrying out distribution function in terms of Section 15 of the Reforms Act, 1998. The licenses granted were subject to the terms and conditions, which required the Licensees to file ARR Proposals to be submitted every year before 31st December, based on the expected revenue calculation and tariffs. Subsequently, four DISCOMS were created on 31.3.2000, which were enjoined with the function of the distribution of electricity. The transmission of electricity is carried out over long distances at extra-high voltage levels from generating stations to urban load centres, while the distribution of electricity is carried out at below 33 KV, 11 KV level.
6. The infrastructure, i.e., transmission lines, State grid, equipment, systems of APSEB, came to be held by APTRANSCO. The higher voltage systems were vested in the APTRANSCO and the lower voltage of APDISCOMs.
7. The APTRANSCO filed Aggregate Revenue Requirement (ARR) for the year 2001-2002, before the Commission set up under the Reforms Act, 1998. On 30.12.2000, each of the Distribution Companies (DISCOMs), along with APTRANSCO, filed their respective joint ARR applications. On 17.1.2001, the APTRANSCO filed Tariff Proposal for the year 2001-02, for its transmission and bulk supply business and jointly with each DISCOM proposal for distribution and rental supply business. The Tariff Proposal also contained a proposal for levy of wheeling charges on persons using the electricity system of licensee in the State. The APTRANSCO proposed a wheeling charge of Rs.1 per Kwh for energy it transmitted through its network. On 24.3.2001, the Commission decided to consider the issue relating to determination of wheeling charges and directed APTRANSCO to file necessary applications and information in this regard. On 24.3.2002, the Commissi
