JUDGMENT :

K.M. JOSEPH, J.

1. Leave granted. Being connected, the appeals are being disposed of by a common judgment.

2. The appellant, in appeal arising out of SLP (C) No. 18607/04, is the Karnataka Power Transmission Corporation Limited and hereinafter referred to as ‘the appellant’.

3. By the impugned judgment, the High Court has allowed Miscellaneous First Appeal No. 4795 of 2002 filed by the first respondent herein, viz., JSW Energy Ltd., earlier known as Jindal Thermal Power Company Limited (hereinafter referred to as the first respondent). The appeal was filed by first respondent under Section 41 of the KARNATAKA ELECTRICITY REFORMS ACT , 1999 (hereinafter referred to as the ‘Act’ for brevity).

4. By the impugned order, the High Court has set aside the order dated 22.05.2002 and the order dated 08.07.2002 which are orders passed by the Karnataka Electricity Regulatory Commission (hereinafter referred to as ‘Commission’ for brevity). The Commission is the appellant in the other appeal. The High Court has after setting aside the impugned orders directed the appellant, to comply with the tariff rate specified in the order of the Government of Karnataka (hereinafter referred to as ‘GoK’ for brevity) dated 12.05.1999. The further direction given is as follows:

“(ii) as per the interim order passed by this Court on 19th November, 2002, it is stated by Dr. Singhvi that the appellant has paid 40% of Rs. 62.5 crores computed by the KPTCL as difference between the PPA rates and the rates fixed by the Commission and, therefore, we direct the KPTCL to repay the amounts recovered from the appellant in pursuance of the interim order dated 19th November, 2002 and also pay the adjustment arising out of payments made by the appellant to KPTCL (i.e., the date between the respondent No. 2/PPA rate and respondent No. 31 entered rate of this Hon'ble Court; as the case may be) from 1st August, 2000 up to November 2002 within a period of one month from today;”

FACTS IN BRIEF

5. The first respondent was permitted by GoK during March 1994 to set up a 2X130 MW cortex gas/ coal based thermal power plant at Bellary. It was apparently intended that Jindal Vijayanagar Steel Limited (JVSL) would consume the power produced from the thermal plant to be set up by the first respondent. The Central Electricity Authority granted the required technical economic clearance in March 1996. Originally, GoK gave approval to set up the power plant by JTPCL for 300 MW. It was initially reduced from 300 to 240 MW in March 1995 and finally, it was modified by order dated 13.02.1996 and reduced to 260 MW (130X2). There were to be two units, that is Unit No.1 and Unit No.2. Karnataka State Electricity Board (KEB for short) entered into a heads of terms with JTPCL on 30.09.1995.

6. Clause 4 of the heads of terms reads as follows:

“4. SALE OF EXCESS ENERGY & CAPACITY TO KEB

If, at any stage, JTPC has excess firm capacity and/or energy for sale to KEB, then KEB may purchase the same from JTPC subject to agreement on price and other terms to be negotiated at the time of such sale.”

7. Heads of terms was essentially a memorandum prior to the agreement, entered into in regard to wheeling and banking in regard to sale to dedicated consumers by the first respondent. It was followed up by a wheeling and banking agreement between the KEB and JTPCL dated 23.01.1996.

8. In the said agreement also, the parties have reiterated the Clause (Clause 2.4) relating to th