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SUPREME COURT OF INDIA
ARUN MISHRA, VINEET SARAN, S. RAVINDRA BHAT, JJ.
CLP INDIA PVT. LTD. – APPELLANT(S)
VERSUS
GUJARAT URJA VIKAS NIGAM LTD. & ANR. – RESPONDENT(S)
CIVIL APPEAL NO. 2793 OF 2010 WITH CIVIL APPEAL NO. 2969 OF 2010
Decided On : 06-05-2020
Electricity Act, 2003 – Sections 86(1)(f) and 125 – Electricity (Supply) Act, 1948 – Section 43A – Recovery of deemed generation incentive – Rights and obligations of parties under PPA have to be read subject to statutory provisions – Provisions of PPA, if they are contrary to statutory provisions, cannot be given effect to – Parties can agree to terms as they deem appropriate, for generation and sale of electricity under Section 43A except that tariff is to be in accordance with provision contained in Section 43A – Clear agreement between parties was that interest on sum of Rs.53.90 crores was payable for specified period 01.07.2003 to 31.12.2009 – Therefore, CLP's claim that any amount was payable, for any period prior to 01.07.2003, was not tenable – Had CLP wished so, nothing prevented it to claim for it during negotiations and have it included as a term of contract – Once having settled for a specified sum, on an amount (Rs. 53.90 crores) that was only fictionally a loan and treated as such, for purpose of fixing interest payable, considering equity infused, in excess of tariff regulations, absence of any like item, such as interest for prior period, precludes a claim – But it was really part of equity component – Therefore, interest was per se not payable, but could be paid in terms of tariff notification or agreement – No claim on any other legal or equitable considerations could have been made – Findings of lower authorities are sound and reasonable – Appeals dismissed. (Paras 20, 23, 31 and 32)
Facts of the Case:
One appeal (CA 2969/2010) has been preferred by Gujarat Urja Vikas Nigam Ltd. (GUVN);the second (CA 2793/2010) has been preferred by CLP (India) Pvt. Ltd. (formerly, Gujarat Torrent Energy Corporation Ltd; later, Gujarat Paguthan Energy Corporation Ltd, a generating company, hereafter collectively "CLP”). Both appeals challenge a common order of the Appellate Tribunal for Electricity (APTEL).
Findings of the Court:
Parties did not harbor any doubt about the period for which the specified interest was payable on such deemed loan. The rate of interest was fixed; likewise, the date from which payment obligations were to arise, too were known. Also, the date upto which the interest on such deemed loan payments were to be made, was known and fixed. In these circumstances, CLP's claim that the payment of interest for a prior period was outstanding, and constituted Gujarat Urja's liability, is insubstantial.
Result : Appeals dismissed.
JUDGMENT
S. RAVINDRA BHAT, J.
1. The present judgment will dispose of two appeals preferred under Section 125 of the Electricity Act, 2003. One appeal (CA 2969/2010) has been preferred by the Gujarat Urja Vikas Nigam Ltd. (hereafter,"Gujarat Urja"or "GUVN”) ;the second (CA 2793/2010) has been preferred by CLP (India) Pvt. Ltd. (formerly, Gujarat Torrent Energy Corporation Ltd; later, Gujarat Paguthan Energy Corporation Ltd, a generating company, hereafter collectively "CLP”). Both appeals challenge a common order of the Appellate Tribunal for Electricity(“APTEL” hereafter).
2. The erstwhile Gujarat Electricity Board (GEB) (now “Gujarat Urja”) entered into a power purchase agreement (“PPA”)with CLP on 03.02.1994. In terms of the PPA, Gujarat Urja was under an obligation to purchase - and CLP was under corresponding obligation to supply - 635 MW of electricity; the tenure of the agreement was 20 years. In terms of Section 43(A) of the Electricity Supply Act, 1948, (hereafter"the Act"), a generating company may enter into a contract for the sale of electricity with the Electricity Board and the tariff for the sale of electricity shall be determined by the authority through the notification issued by the Central Government. Prior the PPA in this case, the Central Government had issued a notification under Section 43A, on 30.03.1992, specifying the controlling norms, terms and conditions for determination of tariff for sale of electricity by the generating company to the Electricity Boards. One of those conditions was the provision for incentive to units using naphtha. On 17.01.1994, an amendment to the notification dated 30.03.1992 was made providing for Note (1) stating that the incentive for generation above the target availability of 68.49% for fixed cost recovery was to be capped.
3. After the signing of the PPA between the parties, an amendment notification dated 06.11.1995 was issued by the Central Government amending the notification (dated 30.03.1992). By this, the Central Government provided that there would no longer be any deemed Generation Incentive payable to any generating company on available declaration of Naphtha as fuel. Based on this notification, the Electricity Board sought to enforce the said notification claiming that this generating company is not entitled to get the incentive for deemed generation. The Electricity Board also sent a letter dated 18.04.1996 informing the CLP, that it proposed to amend the Clause 7.5.2.1 of the PPA to the effect that no deemed generation shall be admissible beyond the level of generation in respect of Naphtha. CLP did not agree to the proposal and by its reply dated 24.04.1996 stated that the notification of 06.11.1995 was inapplicable. Gujarat Urja did not agree to CLP's position and reiterated its earlier position about the change in the incentive terms. A meeting was held in respect of various issues on 06.10.1997 during which several issues were discussed and decisions taken, between the parties. However, the minutes of meeting did not record any decision on the issue of incentive restricted in terms of the notification dated 06.11.1995. There was some more correspondence and meetings, which however, did not lead to any result in regard to both parties accepting that the incentive was payable in terms of the notification of November,1995. Ultimately, with effect from December 1997, CLP started billing Gujarat Urja for the power supplied, including the incentive (ignoring the amending notification); Gujarat Urja continued to pay deemed generation incentive from June, 1998 to 2000.
4. The Union Ministry of Power issued a notification (dated 09.06.1998) which clarified profits on operating norms; several components such as station heat rate, auxiliary consumption and secondary fuel consumption were eliminated and income tax on incentives was no longer permitted (as a pass through in tariff). It was stated that this was prospective in operation and would apply to power purchase ag
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