Case: Central Coalfields Ltd. Vs DLF Power Ltd.. Central Electricity Regulatory Commission
| Judges | M. Karpaga Vinayagam, J. (Chairperson) and A.A. Khan, Member (T) |
| Issue | Electricity Law |
| Judgement Date | July 31, 2009 |
| Court | Central Electricity Regulatory Commission |
Judgment:
M. Karpaga Vinayagam, J. (Chairperson)
-
The Central Coalfields Ltd. is the Appellant herein. The present Appeal has been filed as against the tariff Order: passed by the State Commission of Jharkhand on 7/3/08.
-
The chronological events and facts leading to this Appeal are given below:
-
The Appellant is engaged in the business of raising and selling coal through its various mining leasers situated in the State of Jharkhand. It is also a bulk consumer of electricity. It requires electricity for its various mining operations. Since it is affected by persistent power shortage, the Appellant decided to have a captive power plant to get uninterrupted power supply. Accordingly, the DLF Power Ltd., the Respondent herein was selected for setting up the captive power plants at Rajrappa and Giddi in Jharkhand State.
-
On 8/2/93, the Appellant entered into a Power Purchase Agreement (PPA) with DLF Power Ltd., the Respondent. The Agreement laid down a formula for fixing the tariff. As per the formula, the Respondent shall furnish documentary evidence in support of the actual capital cost to be accepted by the Appellant for fixing the tariff. The Rajrappa power plant was commissioned in the year 1999 and the unit at Giddi was commissioned in the year 2000. It was agreed that for the first year, the tariff to be fixed as Rs. 1.20 per unit and the revision of the said tariff from the second year onwards is permissible on the basis of the variations in capital cost.
-
The Appellant requested the Respondent DLF Power on numerous occasions to furnish the plant-wise and item-wise details of capital cost incurred by it for the purpose of fixing the tariff from the second year, and, the Respondent DLF Power have furnished some documents to the Appellant. The Appellant could not assess the tariff on the basis of the available documents. Therefore, the Appellant approached the State Commission on 14/1/04 and filed an application for fixing the tariff. Then the State Commission demanded details of the capital expenditure from the Respondent. In pursuance of the said demand, the details and documents were furnished by the Respondent to the Commission. During pendency of the said application before the State Commission, the Respondent DLF also filed a Petition before the State Commission on 6/4/04 for fixing the capital expenditure. The State Commission disposed of both the applications on 4/12/04. In this Order:, the capital cost of the two projects incurred by DLF, the Respondent herein was determined by the State Commission as Rs. 72.34 crores in respect of Giddi and Rs. 67.45 crores in respect of Rajrappa, and on the said capital cost, the rate of tariff was also determined by the State Commission fixing the tariff at Rs. 3.30 per kwh (unit). Not satisfied with that Order:, the Appellant filed an Application for review before the State Commission which in turn, dismissed the same on 28/2/05.
-
Challenging these Order:s dated 4/12/04 and 28/2/05, the Appellant filed Appeal No. 166/05 before this Tribunal, on the ground that the capital cost fixed in respect of the two power plants is erroneous and consequently, the determination of tariff is wrong, in as much as the same has been done merely on the basis of the incomplete particulars furnished by the Respondent DLF Power.
-
This Tribunal, by the Final Order: dated 11/5/06, after hearing the submissions of both sides, held that the said Appeal is not maintainable as the State Commission has neither the authority, nor the jurisdiction to fix the tariff between the parties, namely the consumer the Appellant and the generator, the Respondent and the Act provides jurisdiction to the State Commission only to settle the dispute between the licensee and the generating company, and not the consumer and the generator as in this case. However, the Tribunal without disturbing the said Order: of the State Commission on that ground, held that the State Commission, as an expert arbitral Tribunal, could resolve the dispute as referred to it by the parties and as such, the Order: can be construed to be an arbitral award in terms of the PPA entered into between the parties and as such it has all the force of an arbitral award. On the strength of the said observation, the Appeal was dismissed on 11.5.2006.
-
The above-said Order: dated 11/5/06 was challenged before the Supreme Court by both the parties. The DLF Power Ltd., the Respondent herein filed a Civil Appeal No. 3109/06 and the Appellant Central Coalfields Ltd. (CCL) filed an Appeal No. 356 1/09. Both matters were admitted by the Supreme Court.
-
Then both the matters were taken up together, and arguments were heard. During the hearing, the Supreme Court felt that during the pendency of the Appeal, it would be better to have the capital cost fixed by an independent agency first and then to have the tariff determined by the State Commission and after receipt of the said tariff Order:, the Appeals before Supreme Court could be disposed of. Both the parties were agreeable for this course. Accordingly, on 11/7/07, the Supreme Court through the interim Order: during the pendency of the two Appeals before it, directed that M/s. Ernst & Young, an Accounting firm will determine the capital cost in respect of the two power plants after verification of the records, and then to send the Report to the State Commission and thereafter, the State Commission will determine the tariff on the basis of the capital cost fixed by the Agency and then the State Commission shall send the tariff Order: to the Supreme Court, in Order: to enable it to hear the parties and decide the issues in the Appeals.
-
In pursuance of this Order:, M/s. Ernst & Young took up the assignment and verified the records and fixed the capital cost and sent a Report to the State Commission on 26/12/07. On the basis of the said Report fixing the capital cost, the State Commission passed an Order: dated 7/3/08 determining the tariff for the two power plants and sent the Report to the Supreme Court as directed by it earlier. While determining the tariff, the State Commission consisting of two Members i.e. the Chairperson and the Technical Member was not able to take a uniform view and therefore, both the Chairperson and the Member (Technical) separately determined the tariff. Ultimately, by invoking the veto power conferred on him under Section 92(3) of the Act, the Chairperson of the State Commission finally determined the tariff by the Order: dated 7/3/08 and sent the copy of the Tariff Order: to the Supreme Court.
-
After receipt of the said Order:, the Supreme Court took up those two appeals for final disposal. At that juncture, the Appellant CCL filed an Application before the Supreme Court on 28/11/07 in the Appeal pending seeking for cancellation of fixation of the capital cost of the two power plants by the Agency, and also the tariff rates determined by the State Commission, on the ground that the fixation of capital cost by M/s. Ernst & Young as well as determination of tariff by the State Commission was done without giving an opportunity to the Appellant and on the ground that the capital cost fixed by M/s. Ernst & Young was highly inflated and the tariff fixed by the State Commission was on the higher side and for the remand of the matter for fresh consideration.
-
On hearing the Learned Counsel for the parties, the Supreme Court, without going into the merits of the matter, thought it fit to direct the Appellant to file an Appeal as against the tariff Order: dated 7/3/08 before this Tribunal for proper evaluation as a technical body. Accordingly, the Supreme Court, by the Order: dated 1/4/09 directed the Appellant to file an Appeal as against the Order: passed by the State Commission dated 7/3/08 before the Tribunal. The Supreme Court further Order:ed through the same Order: that during the pendency of the Appeal before this Tribunal, the Appellant was permitted to pay the tariff @ Rs. 2.07 per kwh for both the Rajrappa and Giddi power plants and should continue to make the said payment till final disposal of the Appeal by the Tribunal.
-
The Supreme Court further Order:ed requesting this Tribunal to dispose of the said Appeal on merits within two months from the date of filing the Appeal. The Supreme Court also made it clear that it does not express any opinion on the merits of the matter and that all the questions are left open to the parties to be decided by the Tribunal. In accordance with the said direction, the present Appeal has been filed by the Appellant. This Tribunal entertained the Appeal and took up the matter for final disposal. Both the Counsels were heard at length.
-
The Ld. Senior Counsel for the Appellant while assailing the Tariff Order: passed by the Jharkhand State Commission on 7/3/08 has urged the following contentions:
i) Even though the Supreme Court directed both M/s. Ernst & Young and the State Commission to determine the actual capital cost and the tariff on the basis of the formula given in the PPA, has simply fixed the capital cost and the tariff without considering the terms of PPA and without giving an opportunity to the Appellant both while fixing the capital cost as well as while determining the tariff. As per Clause 1.18.2 of the PPA, the Respondent DLF shall furnish documentary evidence in support of the capital cost and the same has to be accepted by the Appellant CCL before the fixation of tariff. But this mandatory Clause provided in the PPA has not been followed. Admittedly, copies of the documentary evidence which was submitted by the Respondent DLF in support of the actual capital cost to the agency have not been furnished to the Appellant. The agency Ernst & Young also did not give opportunity to the Appellant to verify with regard to the veracity of the documents submitted to them. Therefore, the Report fixing the capital cost by the agency is not in compliance with the PPA as directed in the interim...
To continue reading
Request your trial