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IN THE HIGH COURT OF DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
NSL Nagapatnam Infrastructure Private Limited - Appellant
Versus
Central Electricity Regulatory Commission - Respondent
W.P.(C) 6791 of 2017 & CM No. 33742 of 2018
Decided On : 24-11-2022
| Table of Content |
|---|
| 1. petition details and impugned order context. (Para 1 , 2) |
| 2. arguments regarding the bank guarantee's compulsory nature. (Para 3 , 4 , 5 , 6 , 7 , 8) |
| 3. court's interpretation of regulation 12's flexibility. (Para 9 , 10 , 11 , 12 , 13) |
| 4. clarification on the interpretation of encashment of guarantees. (Para 15 , 16 , 20) |
| 5. conclusion and order for remand. (Para 19 , 21 , 22 , 23) |
JUDGMENT
Vibhu Bakhru, J. (Oral)--The petitioner has filed the present petition, inter alia, impugning the order dated 07.09.2016 (hereafter referred to as `the impugned order') passed by respondent no.1 - Central Electricity Regulatory Commission (hereafter referred to as `CERC') - rejecting the petitioner's petition under Section 79(1)(c) and (f) of the Electricity Act, 2003 read with Regulation 32 of the Central Electricity Regulatory Commission (Grant of Connectivity, Long Term Access and Medium Term Open Access in the inter-State transmission and related matters) Regulations, 2009 (hereafter referred to as the `Connectivity Regulations').
2. The petitioner is essentially aggrieved by the action of respondent no.2 - "Central Transmission Utility" (hereafter referred to as `CTU') - encashing the Bank Guarantee in the sum of Rs.1.24 crores (hereafter `the BG'), furnished in favour of Power Grid Corporation of India Ltd, the predecessor-in-interest of CTU. The petitioner had furnished the BG along with its application for Long Term Access (hereafter `LTA') in terms of regulation 12(3) of the Connectivity Regulations. The same was invoked as the petitioner could not proceed with the application for want of the necessary approvals. The CTU had thus encashed the BG in terms of Regulation 12(5) of the Connectivity Regulations. The petitioner had challenged encashment of the BG on several grounds before the CERC but the same was rejected.
3. Mr. Anand Ganesan, learned counsel appearing for the petitioner, has confined the challenge in the present petition to the vires of Regulation 12 of the Connectivity Regulations. The said Regulation reads as under:
"12. Application for long-term access
(1) The application for grant of long-term access shall contain details such as name of the entity or entities to whom electricity is proposed to be supplied or from whom electricity is proposed to be procured along with the quantum of power and such other details as may be laid down by the Central Transmission Utility in the detailed procedure;
Provided that in the case where augmentation of transmission system is required for granting open access, if the quantum of power has not been firmed up in respect of the person to whom electricity is to be supplied or the source from which electricity is to be procured, the applicant shall indicate the quantum of power along with name of the region(s) in which this electricity is proposed to be interchanged using the inter-State transmission system;
Provided further that in case augmentation of transmission system is required, the applicant shall have to bear the transmission charges for the same as per these regulations, even if the source of supply of off-take is not identified;
Provided also that the exact source of supply or destination of off-take, as the case may be, shall have to be firmed up and accordingly notified to the nodal agency at least 3 years prior to the intended date of availing long-term access, or such time period estimated by Central Transmission Utility for augmentation of the transmission system, whichever is lesser, to facilitate such augmentation;
Provided also that in cases where there is any material change in location of the applicant or change by more than 100 MW in the quantum of power to be interchanged using the inter-State transmission system or change in the region from which electricity is to be procured or to which supplied, a fresh application shall be made, which shall be considered in accordance with these regulations.
(2) The applicant shall submit any other informa
The court found that the encashment of a bank guarantee under Regulation 12(5) of the Connectivity Regulations is discretionary, not mandatory, contrary to CERC's interpretation.
Regulation 12(5) discretionary; bank guarantee encashment justified after reasoned exercise considering applicant's prolonged inaction despite extensions and no force majeure, to ensure regulatory se....
Timely submission of bank guarantees as per regulatory requirements is mandatory for maintaining connectivity to the power grid, and non-compliance justifies cancellation.
Bank guarantees are independent contracts and can only be restrained in exceptional cases of fraud or irretrievable injustice.
Encashment of a bank guarantee cannot be stayed without proof of egregious fraud or irretrievable injustice; otherwise, bank guarantees must be honored independently of the underlying contract.
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