The main legal point established in the judgment is the fulfillment of the conditions for a power plant to qualify as a 'Captive Generating Plant' as per the provisions of the Electricity Act, 2003 and Rule 3 of the Electricity Rules, 2005, and the statutory support for the establishment of captive power plants provided by the National Electricity Policy, 2005.

JUDGMENT :

B.R. GAVAI, J.

1. These appeals challenge the judgment dated 6th December 2007 passed by the Appellate Tribunal for Electricity (hereinafter referred to as the “APTEL”) thereby dismissing the appeals filed by the present appellant.

2. The facts in brief giving rise to the present appeals are as under:

M/s Shri Bajrang Power and Ispat Ltd. (hereinafter referred to as “SBPIL”) has established a Captive Generation Plant. M/s Shri Bajrang Metallics and Power Ltd. (hereinafter referred to as “SBMPL”) is a sister concern of SBPIL. SBPIL submitted a petition to the Chhattisgarh State Electricity Regulatory Commission (hereinafter referred to as “the Commission”) for providing open access and wheeling of power through the transmission system of the appellant for captive use by SBMPL. The petition of the SBPIL was for permission to wheel 19 lakh units, corresponding to 13 MW, to SBMPL. It was stated in the said petition that SBMPL holds 27.6% of the equity shares of SBPIL and that more than 51% of the electricity generated by the captive power plant would be consumed by them. It was submitted that the generating capacity of the captive generation plant set up by SBPIL would be 103.68 MU per annum. It was further submitted that out of the said 103.68 MU per annum power generated, 13.22 MU per annum would be utilized in its sponge iron plant. It was further submitted that 54 MU per annum would be supplied to SBMPL through the appellant grid and the balance would be sold to the appellant.

3. The said petition came to be resisted by the appellant. It was contended by the appellant that SBPIL holds more than 72% of the shares of the company. However, its consumption would be limited only to 14.16% (13.22 MU), whereas the consumption of SBMPL holding 26.67% shares, would be 57.87% (54 MU). It was submitted that this was not proportionate to the ownership of the power plant.

4. The Commission, vide its order dated 14th October 2005, rejected the contention of the appellant and held that SBPIL was entitled to supply electricity to its sister concern SBMPL and the same would qualify to be treated as ‘own consumption’ within the ambit of Section 9 read with Section 2(8) of the Electricity Act, 2003 (hereinafter referred to as “the said Act”) and Rule 3 of the Electricity Rules, 2005 (hereinafter referred to as “the said Rules”). While allowing the said petition, the Commission imposed the following conditions:

“(i) The consumption of electricity by the captive users shall not be less than 51% over a financial year, and in case it is not so it would be treated as ‘supply of electricity by a generating company’ in terms of provision of Rule 3(2) of the Rules.

(ii) The CSEB is entitled to charge for wheeling of electricity and levy other charges as per their present rates which shall be subject to revision as per the provisions in regulations on the charges for open access to be notified by the Commission shortly.

(iii) The company may enter into necessary agreement with the CSEB for the sale of balance power under the present terms and conditions of the CSEB, is subject to revision as per the directions of the Commission from time to time.”

5. Being aggrieved thereby, the appellant preferred appeals before the APTEL. The said appeals came to be dismissed by the APTEL vide impugned judgment dated 6th December 2007. Being aggrieved thereby, the present appeals.

6. We have heard Shri Nikhil Nayyar, learned Senior Counsel appearing on behalf of the appellant and Shri Naveen R. Nath, learned Senior Counsel and Smt. Swapna Seshadari, learned counsel appearing on behalf of the respondents.

7. Shri Nayyar submitted that the order passed by the Commission and the impugned judgment passed by the APTEL are contrary to the plain language used in Rule 3 of the said Rules. He submitted that SBMPL is a sister concern of SBPIL which has established the captive power plant. It is submitted that unless SBPIL consumes 51% of the aggregate electricity generated by