2014 Supreme(Raj) 947

RAJASTHAN HIGH COURT AT JAIPUR BENCH
M.N.Bhandari, J.
SKS Power Generation (Chhattisgarh) Limited - Appellant
Versus
State of Rajasthan and others - Respondent
SB Civil Writ Petition No. 18699 of 2013.
Decided On : 7-02-2014

The issuance of LOIs is not a final word for the determination of tariff, which is subject to adoption by the Commission followed by execution of agreement. The challenge to the action of RRVPNL is at a stage which cannot be said to be final but subject to adoption of tariff by the Commission. The Commission is yet to ponder upon and decide the issue as to whether transparent bidding process has been undertaken as per the Bidding Guidelines issued by the Central Government or not. The Commission may refuse to adopt the tariff quoted in the bidding process.

Headnote:

ELECTRICITY ACT, 2003 - SECTION 63 - BIDDING GUIDELINES OF 2005 - LETTERS OF INTENT (LOI) - RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LIMITED (RRVPNL) - TRANSPARENT BIDDING PROCESS - DEVIATION FROM RFP AND BIDDING GUIDELINES - ARBITRATION CLAUSE - JURISDICTION OF APPROPRIATE COMMISSION - WRIT JURISDICTION - MAINTAINABILITY OF WRIT PETITIONS - ALTERNATIVE REMEDY - PUBLIC INTEREST.

Fact of the Case:

RRVPNL issued RFP for procurement of power by transparent bidding procedure. Petitioners participated in the bidding process and quoted their tariff as well as quantum of power. RRVPNL, after receipt of bids, opened it and declared the list of successful bidders and issued LOI in favor of three bidders. Petitioners challenged the LOIs issued by RRVPNL alleging violation of section 63 of the Electricity Act, 2003 (the Act of 2003), Request for Proposal (RFP), and the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees, 2005 (Guidelines of 2005). Petitioners contended that the LOIs were issued after private negotiations with the bidders and not permissible under the Bidding Guidelines of 2005, which are statutory in nature. RRVPNL defended its actions stating that the enhancement of quantum of power and lowering tariff would be in the public interest because supply of power to the consumer depends on the price at which it is purchased.

Finding of the Court:

The court held that the issuance of LOIs is not a final word for the determination of tariff, which is subject to adoption by the Commission followed by execution of agreement. The court found that the challenge to the action of RRVPNL is at a stage which cannot be said to be final but subject to adoption of tariff by the Commission. The court further held that the Commission is yet to ponder upon and decide the issue as to whether transparent bidding process has been undertaken as per the Bidding Guidelines issued by the Central Government or not. The court also held that the Commission may refuse to adopt the tariff quoted in the bidding process.

Issues: 1. Whether the LOIs issued by RRVPNL were in violation of section 63 of the Act of 2003, RFP, and the Guidelines of 2005? 2. Whether the petitioners can directly approach the court or are they required to exhaust the alternative remedy of arbitration? 3. Whether the writ petitions are maintainable in light of the alternative remedy of arbitration and the jurisdiction of the Commission under section 63 of the Act of 2003?

Ratio Decidendi: 1. The court held that the Commission is yet to decide the issue of violation of the Bidding Guidelines and the RFP. The court further held that the Commission may refuse to adopt the tariff quoted in the bidding process. 2. The court held that the petitioners can directly approach the court as the issuance of LOIs is not a final word for the determination of tariff, which is subject to adoption by the Commission followed by execution of agreement. 3. The court held that the writ petitions are maintainable as the challenge to the action of RRVPNL is at a stage which cannot be said to be final but subject to adoption of tariff by the Commission.

Final Decision: The court disposed of the writ petitions with the following directions: 1. The petitioners have alleged violation and deviation from the RFP and the Bidding Guidelines of 2005, which may then be considered and decided by the Commission after providing an opportunity of hearing to the petitioners. 2. The Commission would consider and decide the allegation of deviation and violation of the RFP and the Bidding Guidelines of 2005. While determining the issues, it would exercise power as given under the Act of 2003 and pass necessary order as deem fit in the facts and circumstances of the case. 3. The letters of intent (LOI) shall remain subject to final outcome of the order of the Commission. 4. The Commission would take a proper decision in the matter after considering all the aspects and while doing so, it will take care of the objects of the Bidding Guidelines of 2005 for determination of tariff.