Appeal No. 126 of 2016 and I.A. No. 282 of 2016. Case: Odisha Power Generation Corporation Limited Vs Odisha Electricity Regulatory Commission and Ors.. APTEL (Appellate Tribunal for Electricity)
| Case Number | Appeal No. 126 of 2016 and I.A. No. 282 of 2016 |
| Counsel | For Appellant: J.J. Bhatt, Sr. Adv., Sitesh Mukherjee, Gautam Chawla and Deep Rao, Adv. an dFor Respondents: Prashanto Sen, Rutwik Panda, Anshu Malik and Udayan Verma, Advs. |
| Judges | Ranjana P. Desai, J. (Chairperson) and I.J. Kapoor, Member (T) |
| Issue | Electricity (supply) Act, 1948 [repealed] - Section 43; Electricity Act, 2003 - Sections 108, 108 (1), 14, 178, 181, 2(28), 61, 61(b), 62, 79(1), 79(1)(j), 86, 86(1)(b); General Clauses Act 1897 - Sections 14, 21 |
| Judgement Date | April 06, 2017 |
| Court | APTEL (Appellate Tribunal for Electricity) |
Judgment:
Ranjana P. Desai, J. (Chairperson)
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The Appellant is a Company incorporated under the Companies Act 1956. The Appellant is a generating company in terms of Section 2(28) of the Electricity Act, 2003 ("the said Act") and has established a Thermal Power Station with a capacity of 420 MW having 2 units of 210 MW each.
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Respondent No. 1 is the Odisha Electricity Regulatory Commission ("the State Commission") Respondent No. 2 is a Company incorporated under the Companies Act, 1956 engaged in the business of bulk purchase and bulk sale of electricity inter alia to the four distribution companies operating in the State of Odisha and is also a deemed distribution licensee under Section 14 of the said Act, engaged in the trading of surplus power.
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The Appellant was incorporated as a wholly owned Government Company of the State of Odisha with the main objective of establishing, operating and maintaining thermal power generating stations. According to the Appellant further to Power Sector Reforms undertaken in the State of Odisha in 1997, 49% of the shareholding in the Appellant was divested in favour of AES Corporation, USA with the balance 51% held by the Government of Odisha ("GoO").
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The Appellant and Respondent No. 2 executed a Bulk Power Supply Agreement dated 13/08/1996 effective from 01/01/1995 ("PPA") for the sale of entire quantum of power from the Appellant's generating station to Respondent No. 2 on the terms and conditions contained therein. The PPA dated 13/08/1996 was approved by GoO in exercise of its powers conferred under Section 43 of the Electricity (Supply) Act 1948 on 24/12/1996. Respondent No. 2 in turn was to sell the power purchased from the Appellant to the distribution companies of Odisha through appropriate power sale arrangements.
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According to the Appellant in tune with the Power Sector Reforms Programme to secure energy security for consumers in order to facilitate the divestment process Respondent No. 2 and GoO executed a Tripartite Agreement dated 18/10/1998 providing for amendments to the PPA dated 13/08/1996 including freezing the tariff norms in the PPA for its entire term and agreeing to establish Units 3 and 4 of the Appellant's generating station ("Tripartite Agreement"). According to the Appellant the basis of the investment in the agreement was that the tariff norms for Units 1 and 2 would be frozen. Thereafter an Escrow and Security Agreement was executed between the Appellant, Respondent No. 2 and the Union Bank of India on 30/11/1998 to secure the payment of tariff ("Escrow Agreement").
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Disputes arose between the parties in respect of the enforcement of the Escrow Agreement. The Appellant invoked the writ jurisdiction of the Orissa High Court in OJC No. 13338 of 2001 seeking a direction to Respondent No. 2 and Central Electricity Supply Utility of Odisha ("CESCO") to comply with its inter se escrow arrangement with Respondent No. 2. The Appellant also raised a ground that the State Commission had no jurisdiction to approve the Escrow Agreement or the PPA dated 13/08/1996. In the meanwhile Respondent No. 2 approached the State Commission in Case No. 13 of 2002 seeking approval of the PPA dated 13/08/1996 and the Escrow Agreement which was opposed by the Appellant on the ground that the State Commission had no jurisdiction to do so. In its order dated 22/02/2005 in OJC No. 13338 of 2001 the Orissa High Court held inter alia that the State Commission had jurisdiction to approve the PPA dated 13/08/1996 and determine the tariff for the Appellant's generating station. The Appellant challenged the said order in the Supreme Court being SLP No. 6812-13 of 2005 and prayed for a stay of the Orissa High Court's order and tariff determination proceedings. The Supreme Court by its order dated 29/04/2005 stayed the tariff determination proceedings pending before the State Commission.
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In the meanwhile, the Appellant, Respondent No. 2 and GoO entered into discussions to resolve the disputes. With a view to resolving the disputes GoO constituted a task force chaired by the Chief Secretary, GoO and other top ranking officials. Based on the recommendations of the said task force, the Department of Energy, GoO issued Notification No. 7216 dated 21/06/2008 and Notification No. 10061 dated 12/10/2009 to resolve all disputes between the parties inter alia on the condition that the PPA dated 13/08/1996 would be amended to state that the terms, conditions and norms of tariff set out at Schedule-II of the said PPA would stand frozen for its entire term. The said notification also stipulated that the Appellant and Respondent No. 2 would file the amended PPA before the State Commission for its approval and withdraw the SLP pending before the Supreme Court. As a part of the settlement the Appellant agreed to invest and finance the setting up of the expansion project.
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Pursuant to the above, the Appellant agreed to amend the PPA dated 13/08/1996 and the Tripartite Agreement in terms of Notification No. 7216 dated 21/06/2008 and Notification No. 10061 dated 12/10/2009. Consequently the Appellant and Respondent No. 2 also executed a Supplementary Agreement dated 6/09/2012 to the Tripartite Agreement. The Appellant and Respondent No. 2 also executed a Supplementary Agreement dated 19/12/2012 to the PPA dated 13/08/1996 which inter alia provided that the tariff norms would be frozen for the entire remaining period of the PPA dated 13/08/1996. The relevant excerpts of the Supplemental Agreement to Tripartite Agreement which encapsulates the settlement arrived at between the Appellant, Respondent No. 2 and GoO, are as under:
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(ix) The Task Force constituted by the Government of Odisha made recommendations for overall settlement of the disputes and differences and the Govt. of Odisha based on the recommendation of the Task Force, issued Notification No. 7216, dt. 21.06.2008 for resolving all such disputes on terms and conditions contained therein, in regard to units 1 & 2 and also in regard to setting up of units 3 & 4, as an overall settlement of all such disputes and differences (copy of which has been annexed as Annexure-II)
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(x) Subsequently, in consideration of the representations made by OPGC, Govt. of Odisha issued Notification No. 10061, dt. 12.10.2009 (the Second Notification, copy of which has been annexed as Annexure-III) amending the above notification dt. 21.06.2008 to further clarify specifically on the adoption of supercritical technology and sharing of power from the proposed units 3 & 4 thereof.
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(xii) OPGC has also agreed to amend the PPA in term of the Govt. Notification dtd. 21.06.2008 and amend the Tripartite Agreement after taking into consideration inter alia the Govt. Notifications dtd. 21st June 2008 and dtd. 12.10.2009.
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(xiv) The parties agree that with the execution of this Agreement the parties have settled all the pending differences between them and OPGC shall withdraw SLP No. 6812-6813 of 2005 pending before the Hon'ble Supreme court of India.
1) That Clause 8 of the Tripartite Agreement shall be substituted to read as follows:-
8 (a) OPGC shall take expeditious steps within its powers and control to commission Units-3&4 with adoption of super critical Technology, each having gross installed capacity of not less than 660 MW and in aggregate not less than gross installed capacity of 1320 MW and half of the generation capacity of units-3&4 shall at all times stand allocated to GRIDCO...
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Relevant excerpts of the Supplementary Agreement dated 19/12/2012 to the PPA dated 13/08/1996 are as under:
"(ix) The Task Force constituted by the Government of Odisha made recommendations for overall settlement of the disputes and differences and the Govt. of Odisha based on the recommendation of the Task Force, issued Notification No. 7216, dt. 21.06.2008 for resolving all such disputes on terms and conditions contained therein, in regard to units 1 & 2 and also in regard to setting up of units 3 & 4, as an overall settlement of all such disputes and differences (copy of which has been annexed as Annexure-II)
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(xi) OPGC has also agreed to amend the Existing PPA and the Tripartite Agreement after taking into consideration, inter alia, the Government of Odisha Notification dtd. the 21st June 2008
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(xiii) The parties agree that with the execution of this Agreement the parties have settled all the pending differences between them and OPGC shall withdraw the SLP bearing No. 6812-6813 of 2005 pending before the Hon'ble Supreme Court of India.
D) that for Clause 12.0 of Schedule II of the Existing PPA following clause shall be substituted, namely:-
"12.0 Revision of Tariff:
"In order to avoid any ambiguity with regard to tariff norms and parameters for unit 1 & 2, all terms and parameters for determination of tariff for units 1 & 2 shall be as per this PPA as amended upto dated. All tariff parameters will stand frozen till validity of this PPA as amended upto date notwithstanding modification in tariff norms by the CERC from time to time. Accordingly all references in other provisions of this PPA to change in tariff parameters in future shall be deemed to have been deleted. The tariff shall however be subject to revision at the time of renewal, replacement or extension of this Supplementary agreement or on further enhancement of the generation capacity of units 1 and/or 2, if any"
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Thus all the stakeholders agreed that the tariff norms in the PPA would remain frozen for its entire term. According to the Appellant it was an incentive for the Appellant to proceed with the expansion project. It is the Appellant's case that on the basis of the agreement between the parties the Appellant withdrew its Special Leave Petition ("SLP") pending before the Supreme Court on 14/02/2013. The relevant portion of the Supreme Court's order dated 14/02/2013 reads as under:
"Needless to say that on filing of the amended Power Purchase Agreement between the...
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