Korba Power Limited vs Chhattisgarh State Electricity Regulatory Commission

Headnote:(A) Electricity Act, 2003 - Sections 86(1)(a) and 86(1)(f) read with Sections 62 and 64(5) - Carrying cost - Delay in filing tariff petition - Principles of natural justice - Appellant supplied power to Respondent No. 2 from 22.06.2011 to 01.10.2012, but Respondent made payments at a flat rate - Appellant filed a dispute petition under Section 86(1)(f) which was dismissed on 30.12.2014, with observation that tariff had to be determined - Appellant then filed a tariff petition on 19.01.2018, which was disposed of on 08.08.2022 - Commission granted carrying cost only from 03.10.2019, citing delay in filing and data gap - Held, Commission violated principles of natural justice by denying carrying cost without giving Appellant an opportunity to explain delay - Mere delay does not disentitle a party to carrying cost unless it is intentional, contumacious, inordinate, and unexplained - Further, the capital cost of the plant was sub judice before the Tribunal in another appeal until 21.03.2018, so the Commission could not have determined tariff earlier - The data gap was due to the Commission seeking additional information, and Appellant cannot be held responsible - The Commission also inconsistently allowed a higher rate (12.8%) in a previous order for the same unit without any reason for departure. (Paras 11, 12, 13, 14, 17, 21, 22, 24, 30)

(B) Electricity Act, 2003 - Carrying cost - Payment of interest is a normal accretion to money; a person deprived of the lawful use of his money is entitled to interest - The doctrine of restitution requires that interest follows when money has been retained unjustly - Respondent enriched itself by using Appellant's money, and thus is liable to pay carrying cost from the date tariff became due. (Paras 25, 26, 27, 29)

Facts of the case:
The Appellant, a generating company, supplied 35% power from its 600 MW thermal power plant (Unit-II) to Respondent No. 2 from 22.06.2011 to 01.10.2012 under a PPA. Respondent No. 2 paid a flat rate of Rs. 2.85/kWh, which was not acceptable to the Appellant. The Appellant filed a dispute petition under Section 86(1)(f) before the State Commission, which was dismissed on 30.12.2014, holding that tariff had to be determined first. The Appellant then filed a tariff petition on 19.01.2018. The Commission, vide its order dated 08.08.2022, determined tariff but granted carrying cost only from 03.10.2019, citing delay in filing the petition and a data gap.

Findings of Court:
The impugned order was set aside to the extent it denied carrying cost prior to 03.10.2019 and limited the rate. The Commission violated natural justice by not hearing the Appellant on the delay issue. The delay was not intentional or contumacious; the capital cost of the plant was under determination in another appeal before the Tribunal until 21.03.2018, rendering earlier determination impossible. The data gap was not attributable to the Appellant as it promptly submitted additional information sought by the Commission. The Commission's inconsistency in allowing a higher rate (12.8%) in a previous order for the same unit without justification was not sustainable.

Issues: 1. Whether the Commission was justified in denying carrying cost to the Appellant for the period prior to 03.10.2019 solely on the ground of delay in filing the tariff petition. 2. Whether the rate of carrying cost should be the same as allowed in the Commission's earlier order for the same unit.

Ratio Decidendi: Mere delay in filing a tariff petition does not disentitle a party to carrying cost unless the delay is intentional, contumacious, inordinate, and unexplained. The Commission must give the party an opportunity to explain the delay. Payment of interest is a necessary corollary to the unlawful retention of money; the person deprived of the use of his money is entitled to interest. The Commission must be consistent in its orders and cannot deviate without providing a reason.

Result: Appeal allowed. The impugned order was set aside to the extent assailed. The Appellant is entitled to carrying cost @ 12.8% from the date when the tariff payable became due as per the PPA till the date of actual payment.

Legal Category Hierarchy

1. Appeal against order disallowing carrying cost for delayed tariff determination for power supplied earlier. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 )

2. Dispute over entitlement to carrying cost for period of delay in filing tariff petition. (Para 1 , 10 , 11 , 12 , 13 , 14 )

3. Appeal allowed; appellant entitled to carrying cost at 12.8% from due date till actual payment. (Para 32 , 33 )

4. Does denial of carrying cost without affording hearing violate natural justice?

Yes, the commission condemned the appellant unheard by not seeking explanation for delay, violating audi alteram partem. (Para 11 , 12 )

5. Is mere delay in filing tariff petition sufficient to disentitle a generator from carrying cost?

No, delay must be intentional, contumacious, and unexplained; mere delay does not automatically disentitle carrying cost. (Para 13 , 14 , 22 )

6. Should the period during which capital cost determination was sub judice be considered in evaluating delay?

Yes, the court considered that because capital cost was pending, the commission would have deferred tariff determination; thus delay was not attributable to appellant. (Para 19 , 20 , 21 , 22 )

7. Is a generator responsible for delay when the commission takes time to request additional data?

No, the appellant cannot be held responsible for late submission of data as it responded promptly; the commission's delayed request does not disentitle carrying cost. (Para 24 )

8. Should the rate of carrying cost be consistent with a prior order on the same project?

Yes, the commission must provide reasons for departing from its own previous order on carrying cost rate for the same unit; inconsistency without reason is impermissible. (Para 30 , 31 )

JUDGMENT

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The Appellant – M/s Korba Power Limited previously known as (M/s Lanco Amarkantak Power Limited) is aggrieved by the order dated 8^th August, 2022 passed by 1^st Respondent – Chhattisgarh State Electricity Regulatory Commission (hereinafter referred to as “the Commission”) thereby determining tariff for the Appellant’s thermal power project having the capacity of 600 MW in District Korba Chattisgarh for the Financial Year 2011-12 i.e. for the period from 22^nd June, 2011 to 31^st March, 2012 and Financial Year 2012-13 i.e. for the period from 1^st April, 2012 to 1^st October, 2013 for the power generated from Unit-II of the said power project. The Appellant is assailing the said tariff order of the Commission to the extent it has granted carrying cost to the Appellant only w.e.f. 3^rd October, 2019 for the power supplied by appellant to 2^nd Respondent during the Financial Year 2011-12 and also to the extent that carrying cost w.e.f. 3^rd October, 2019 has been granted in line with the computation done by the Commission while passing the tariff orders for the state power companies.

2. The Appellant is a generating company within the meaning the said term in Section 2(23) of Electricity Act, 2003 and is operating the 600 MW coal based thermal power project in District Korba comprising two units of 300 MW each. The instant appeal pertains to Unit-II of the plant.

3. The Respondent No. 2 – Chhattisgarh State Power Training Company Limited is a deemed trading licensee and is authorized representative of Government of Chhattisgarh to execute Power Purchase Agreement (PPA) with the independent power producers as well as to sell the power so contracted on behalf of the Government. The 3rdRespondent Chhattisgarh State Power Distribution Company Ltd. is a Distribution Licensee in the State of Chhattisgarh.

4. In pursuance to a tripartite memorandum of understanding dated 17^th September, 2008 and Implementation Agreement dated 1^st August, 2009 executed between the Appellant, Government of Chhattisgarh and the 3^rd Respondent, Power Purchase Agreement dated 12^th January, 2011 was entered into between the Appellant and the 2^nd Respondent for supply of 35% power from Unit-II of the Appellant’s aforesaid power plant at a tariff to be approved by the Commission.

5. On the basis of the said Implementation Agreement and the PPA, this Tribunal vide order dated 23^rd March, 2011 passed in Appeal No. 15 of 2011 had directed the Appellant to supply 35% power to 2^nd Respondent and the balance 65% power to Haryana Discoms through PTC. It would be pertinent to state here that the said order of this Tribunal was made absolute vide final order dated 4^th November, 2011 passed in the said appeal and was even continued by the Hon’ble Supreme Court vide interim order dated 16^th December, 2011 passed in Civil Appeal No. 10239 of 2011. Accordingly, pursuant to the aforesaid order dated 23^rd March, 2011 of this Tribunal, the Appellant commenced supply of power to 2^nd Respondent from 22^nd June, 2011 and continued the supply till 1^st October, 2012 when the 2^nd Respondent itself stopped scheduling of power from Unit-II of the Appellant’s power project.

6. It appears that the 2^nd Respondent had decided to release payments to the Appellant at a flat rate of Rs.2.85 per kwh or actual tariff rate whichever was lower. The tariff rate was not acceptable to the Appellant and accordingly it filed petition No. 48 of 2012 before the Commission seeking adjudication of the dispute between it and 2^nd Respondent under Section 86(1)(f) of the Electricity Act, 2003. However, the petition came to be rejected by the Commission vide order dated 30^th December, 2014 holding that the disputes in relation to tariff could not be resolved without determination of tariff.

7. Accordingly, the Appellant approached the Commission again by way of Petition No. 18 of 2018 under Section 86(1)(a) read with Section 62 and 64(5) of the Electricity Act, 2003

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2025 Supreme(Online)(APTEL) 80

APPELLATE TRIBUNAL FOR ELECTRICITY
Sandesh Kumar Sharma, Technical Member, Virender Bhat, Judicial Member
Korba Power Limited – Appellant
Versus
Chhattisgarh State Electricity Regulatory Commission – Respondent
Appeal No. 148 of 2023

Mere delay in filing a tariff petition does not disentitle a party to carrying cost unless the delay is intentional, contumacious, inordinate, and unexplained; the Commission must follow natural justice and give reasons for any departure from prior precedent.

Legal Category Hierarchy

Table of Contents

4. Does denial of carrying cost without affording hearing violate natural justice?

5. Is mere delay in filing tariff petition sufficient to disentitle a generator from carrying cost?

6. Should the period during which capital cost determination was sub judice be considered in evaluating delay?

7. Is a generator responsible for delay when the commission takes time to request additional data?

8. Should the rate of carrying cost be consistent with a prior order on the same project?

2025 Supreme(Online)(APTEL) 80

APPELLATE TRIBUNAL FOR ELECTRICITYSandesh Kumar Sharma, Technical Member, Virender Bhat, Judicial MemberKorba Power Limited – AppellantVersusChhattisgarh State Electricity Regulatory Commission – RespondentAppeal No. 148 of 2023

Mere delay in filing a tariff petition does not disentitle a party to carrying cost unless the delay is intentional, contumacious, inordinate, and unexplained; the Commission must follow natural justice and give reasons for any departure from prior precedent.

Legal Category Hierarchy

Table of Contents

4. Does denial of carrying cost without affording hearing violate natural justice?

5. Is mere delay in filing tariff petition sufficient to disentitle a generator from carrying cost?

6. Should the period during which capital cost determination was sub judice be considered in evaluating delay?

7. Is a generator responsible for delay when the commission takes time to request additional data?

8. Should the rate of carrying cost be consistent with a prior order on the same project?

Cases Referred (4)

APPELLATE TRIBUNAL FOR ELECTRICITY
Sandesh Kumar Sharma, Technical Member, Virender Bhat, Judicial Member
Korba Power Limited – Appellant
Versus
Chhattisgarh State Electricity Regulatory Commission – Respondent
Appeal No. 148 of 2023