TMI Blog2010 (7) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... er Distribution Company of Andhra Pradesh Ltd. have come up in appeal before this Court u/s 125 of the Electricity Act, 2003. the main controversy, in the present case relating to the jurisdiction and fixation of tariff by the Regulatory Commission. HELD THAT:- the restriction with regard to third party sales was not only creation of a directive issued or approval granted by the Regulatory Commission, but was actually in furtherance to the contract entered into between the parties. Rights and liabilities arising from a binding contract cannot be escaped on the basis of some presumptions or inferences in relation to the facts leading to the execution of the contract between the parties. The jurisdiction of the Regulatory Commission, in the facts of the case, arises not only from the statutory provisions under the different Acts but also in terms of the contract executed between the parties which has binding force. Lastly, but with great emphasis, it was argued on behalf of the respondents that enforcement of the purchase price at the rate determined by the Regulatory Commission along with complete prohibition on the right of the Non-conventional Energy Generator/Developers to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spose of these appeals with the order. - B.S. Chauhan and Swatanter Kumar, JJ. Civil Appeal Nos. 5974, 5975, 5976, 5977, 5978, 5979, 5980, 5981, 5982, 5983, 5984, 5985, 5986, 5987, 5988, 5989 and 5991 of 2006 and 4106 of 2009 For Appearing Parties: Gopal Subramanium, S.G., L.N. Rao, Challa Kodandaram, Raju Ramachandran, Sr. Advs., Shiva Rao P., A. Subba Rao, A.T. Rao, K.V. Mohan, Suyodhan Byrapaneni, G. Ramakrishna Prasad, T.V. Ratnam, K. Subba Rao, P. Ramesh Babu, T.V. George, Y. Vismai Rao, Y. Raja Gopala Rao, K. Parameshwar, Khwairakpam Nobin Singh, Rohit Rao, Kamal Budhiraja, Siddharth Bawa, Advs. for Dua Associates, B. Kanta Rao, Sudha Gupta, M. Srinivas R. Rao, S. Chandra Shekhar, B. Gopal Reddy, Manoj Kumar, R.V. Kameshwaran, Ravi Shastri, Vinita Sasidharan, S. Udaya Kumar Sagar, Bina Madhavan, Advs. for Lawyers' Knit Co., Anil Kumar Tandale, V.G. Pragasam, Anagha S. Desai, John Mathew, Guntur Prabhakar, Rohit Rao M. and Aribam Guneshwar Sharma, Advs. JUDGMENT Swatanter Kumar, J. 1. Andhra Pradesh Electricity Regulatory Commission (for short 'Regulatory Commission') was created in furtherance to the provisions of the Andhra Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purchase Agreement (for short 'PPA') was a statutory document and the Regulatory Commission had no authority to interfere with the same. It could not even be altered by the Regulatory Commission. One of the most important finding recorded by the Tribunal was that the Regulatory Commission has neither the power nor jurisdiction to compel the Developers to sell the power generated by them to APTRANSCO and/or DISCOM. Feeling seriously aggrieved from the order of the Tribunal the Transmission Corporation of Andhra Pradesh Ltd. as well as Eastern Power Distribution Company of Andhra Pradesh Ltd. have come up in appeal before this Court under Section 125 of the Electricity Act, 2003. Though the controversy, in the present case, appears to be a narrow one but on examination it is clear that there are various ancillary questions, which need to be decided by the Court, prior to answering the main controversy relating to the jurisdiction and fixation of tariff by the Regulatory Commission. Arguments at great length were addressed by different learned Counsel appearing for the parties. Before we notice the facts in detail or even refer to the contentions raised, it will be appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Government and the said Commission has no executive power nor a plenary power as claimed by it. D. Whether the plea of estoppel advanced by Developers is sustainable on facts and law? The points 'D' 'E' are answered in favour of the appellants and they are substantiated by the appellants. E. Whether the plea of legitimate expectation advanced by Developers is sustainable? The points 'D' 'E' are answered in favour of the appellants and they are substantiated by the appellants F. Whether the A.P. Electricity Regulatory Commission is possessed of Executive Powers to issue policy and executive directions in respect of NCE Developers in the State? On the point 'C' and 'F', we hold that the Andhra Pradesh Regulatory Commission has no power or authority to alter the policy direction issued by the State Government and the said Commission has no executive power nor a plenary power as claimed by it. G. Is not the Commission bound by directions already issued by the State in respect of NCE Developer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 made in R.P. No. 84/2003 and O.P. No. 1075/2000 with all differences and arrears thereof, up to date and continue to pay at the same rate, until a new PPA is entered by agreement between them in terms of State Government Policy direction, that may be made hereafter and approved by the Regulatory Commission. This Judgment shall be given effect from the date of communication. For payment of tariff difference and arrears, the respondents shall have six weeks from the date of this Judgment, failing which the respondents shall be liable to pay interest at 9% per annum with effect from the month on which the difference in tariff rate remains to be paid ant till date of payment. L. To what relief, if any? Consequently, the Appeal Nos. 46, 48, 49 and 50 of 2005 preferred by the AP Transmission Corporation and the four Discoms will stand dismissed as there are no merits in them. The parties shall bear the respective cost throughout. 2. The above conclusions arrived at by the Tribunal on the factual matrix that the Government of Andhra Pradesh on 18th January, 1997 by GO Ms. No. 93, with the object of encouraging generation of electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and duly collected, to require licensees to formulate prospective plans and schemes in cooperation with others for the promotion of generation, transmission, distribution and supply of electricity. Besides these powers, which have been noticed by us, inter alia, the residue clause has been worded very widely to permit the Regulatory Commission to undertake all incidental or ancillary things. Under Section 15, the Regulatory Commission is vested with the power to issue licences and to enter into agreements on specified terms and also to determine the charges and establish tariff in terms of Clause (5) of Section 15 of the Reform Act, 1998. It needs to be noticed that the State of Andhra Pradesh was vested with the powers and infact the duty to constitute the Regulatory Commission in terms of Section 11 afore noticed. 3. The Regulatory Commission was constituted as per the provisions of Reform Act, 1998 vide notification dated 3rd April, 1999 and it was to perform all regulatory functions pertaining to the electricity industry in the State of Andhra Pradesh. It was commonly agreed before us during the course of argument that it is the Electricity Regulatory Commission for the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Developers, individually as well as acting through their Association, filed various objections in response to the notice dated 23rd October, 2003. All the parties were granted hearing by the Regulatory Commission which, then, passed the order dated 20th March, 2004, reducing the price payable by APTRANSCO to Non-Conventional Energy Developers towards the supply of electricity. Some of the Developers moved to the Andhra Pradesh High Court by filing a Writ Petition No. 7222 of 2004 in which interim order dated 15th April, 2004 came to be passed directing APTRANSCO to continue to pay to NCE Developers for the power that may be supplied by them as per the earlier rates prevalent on 1st April, 2004. By order dated 27th April, 2004, the High Court disposed of the batch of the Writ Petitions while issuing the direction to the Developers to approach the Regulatory Commission and seek review of its order dated 20th March, 2004. The Regulatory Commission was also directed to take up the review petition and dispose of the same within 8 weeks. Till then, the interim order dated 15th April, 2004 was to remain in force. This resulted in filing of the Review Petitions before the Regulatory C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation through Non-Conventional Energy sources. The Govt. of Andhra Pradesh issued order No. 19 dated 16th March, 1996 under which it accorded certain incentives in respect of the Developers with whom NEDCAP had entered into the memorandum of understanding. A review of these incentives was taken after which GO Ms. 93 dated 18th November, 1997 was issued, as already noticed and it was decided to provide uniformity to all the projects based on renewable sources of energy like Waste, Wind, Bio-mass, Co-generation, Municipal Waste and Mini Hydro projects. 6. The Regulatory Commission had passed an order dated 6th March, 2000 giving certain directions including that the Developers could sell the power generated by them to third party upto 17th November, 2000. The rates were indicated, as we have already noticed, and that there would be reviewed with regard to purchase price with reference to each Developer on completion of 10 years from the date of the commission of the project. After noticing various objections that had been raised by the Developers it was stated that the Regulatory Commission was not attempting to stop any incentive while referring to the statistics and the market c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will also be a review of the purchase price with specific reference to each developer on completion of 10 years from the date of commissioning of the project (by which time the loans from financial institutions would have been repaid) when the purchase price will be reworked on the basis of return on equity. O M expenses and the variable cost. 31. However, if any developer wishes to raise any specific issue with reference to this order, he will be entitled to apply to the Commission in the manner provided in the regulations. 7. After passing of this order by the Regulatory Commission the parties executed PPAs. These agreements were signed on the lines of the directives given in the order of Regulatory Commission. In fact, it was stated that the agreements were required to be and were actually approved by the Regulatory Commission. In terms of Clause 5 of the PPA these agreements were enforceable subject to obtaining consent of the Regulatory Commission as per Section 21 of the Reform Act, 1998. Obviously, the rates and conditions specified in the earlier proceedings of 11th November, 1999, 1st April, 2000, 27th January, 2001 and 13th July, 2001 were accepted by the parties. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o submit their views and objections on the above issues. After hearing the parties, the Regulatory Commission considered the proposal for tariff. The proposal submitted by APTRANSCO and NEDCAP were as under: APTRANSCO's Tariff Proposals Particulars Unit Tariff (Levelised Tariff over the life of the project) Year-on-year escalation Existing Plants Rs/kWhr. New Plants Rs/kWhr. Existing New Mini Hydel 2.42 2.31 --- --- Bagasse 2.23 2.25 2% 2% Biomass 2.27 2.27 2% 2% Waste to Energy Nil 2.66 --- 1% Wind 2.52 2.55 --- --- NEDCAP Tariff proposals: Bagasse ₹ 2.62-1st year ₹ 2.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idelines, Go AP orders and APERC's order OP. No. 1075/2000 dated 20.6.2001 or should they be different for different categories of NCE projects. (ii) Whether the tariff should be a single part tariff or a two part tariff. (iii) Whether the tariff should be project specific or uniform for all project falling in a category. (iv) Whether there should be a cap on tariff when a project exceeds the expected minimum performance. (v) Social and environmental considerations. (vi) Control period. 12. The Regulatory Commission decided tariff fixation in relation to Bagasse based co-generation plants, Bio-mass power generation and Mini hydel projects separately. The specific issue raised by the objectors was that the benchmarking of capital cost should be based on market trends, confirmed through competitive bidding from time to time. Though APTRANSCO accepted this in principle, but stated that they expect a detailed procedure from the Regulatory Commission for an effective competent bidding. The tariff basis was questioned as well as it was submitted that tariff beyond threshold limit should be limited to the variable cost and incentives only and not the full tariff. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in order to arrive at PLF will be misleading as it will not take into consideration the captive consumption. The incentive payments begin after threshold PLF. In order to ascertain the PLF levels, APTRANSCO should make arrangements for authenticated meter reading at the generator terminals so that the two-tier tariff is properly implemented. ix. Developers will be entitled to dispatch 100% of the available capacity without reference to Merit Order Dispatch subject, however, to any system constrains. 13. After arriving at this conclusion the Regulatory Commission also specifically clarified that as and when, however, trading function of APTRANSCO is segregated and vested in new entity pursuant to the Electricity Act, 2003, the terms and conditions contained therein shall be binding on the new entity in the same manner as was applicable to APTRANSCO. 14. As is clear from the order itself that it dealt with, primarily, the question of refund/fixation of tariff in relation to various generation projects. It decided no other matter and even these findings were subsequently questioned by the Developers before the High Court and in furtherance to the order of the High Court dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pert bodies to whom the job is assigned under the law. For example, Section 62 of the Electricity Act, 2003 requires an appropriate Commission to determine the tariff in accordance with the provisions of the Act. The Regulatory Commission has been constituted and notified under the provisions of Section 3 read with Section 11 of the Reform Act, 1998 which in terms of Section 11(1)(c) (e) is expected to fix the tariff as well as the terms of licence. There are three different legislations in course and the Regulatory Commission has been constituted under the Reform Act, 1998 which in turn would be the Commission as contemplated under the Electricity Regulatory Commission Act, 1998 and the Electricity Act, 2003. In terms of first proviso to Section 82(1) of the Electricity Act, 2003 the State Electricity Regulatory Commission established by the State Government under Section 17 of the Electricity Regulatory Commission Act, 1998 and the enactment specified in the schedule shall be the State Commission for the purposes of this Act. Even in terms of Section 185(3) of the Electricity Act, 2003 the said authority would be deemed to be an appropriate Commission for all purposes and inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not followed or it is so perverse and arbitrary that it hurts the judicial conscious of the Court making it necessary for the Court to intervene. Even in these cases the scope of jurisdiction is a very limited one. This Court in the case of Association of Industrial Electricity Users v. State of Andhra Pradesh (2002) 3 SCC 711 while dealing with the provisions of tariff fixation in terms of the provisions of the Reform Act, 1998, observed that even where the Act did not envisage classification of consumers according to the purpose for which electricity is used, Sub-section(9) of Section 26 of that Act does state that the tariff rate relatable to classification of consumers would be permissible, of course, depending upon various factors stipulated in Section 26(7) of the Act. The Court finally held as under: 11. We also agree with the High Court that the judicial review in a matter with regard to fixation of tariff has not to be as that of an Appellate Authority in exercise of its jurisdiction under Article 226 of the Constitution. All that the High Court has to be satisfied with is that the Commission has followed the proper procedure and unless it can be demonstrated that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 1998 Act could not have gone into the validity of the said Regulations in exercise of its appellate power. 20. In view of the above settled position of law we are of the considered opinion that the present case is one where this Court should examine determination of tariff on merits and particularly, in view of the directions that we propose to pass finally in this case. 21. The issue relating to jurisdiction, again, would have to be divided into two different parts. Firstly, whether the Regulatory Commission could exercise the powers for determination and/or re- fixing the price by resorting to tariff fixation powers under the Act and secondly, with regard to sale of generated electricity by the Generators to parties other than State Transmission Utility or Distribution Company. In regard to first part of this issue the Tribunal in its order, while answering issue B, held that Regulatory Commission has no jurisdiction to re-fix the regulatory purchase price by resorting to tariff fixation methods specified under the provisions of law. Similarly, it also answered issue A in the negative and against the Regulatory Commission. The primary reason recorded by the Tribunal is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy pertaining to the non-conventional energy sources. A minimum buy back price of ₹ 2.25 per unit had been proposed and it required the States to consider that these guidelines were not exhaustive. Other matters, including additional incentives, attractive packages could be formulated by the State and accordingly the States were required to take further steps. The very opening part of the guidelines dealt with the operative period and it was stated that The Scheme of promotional and fiscal incentives will come into operation with immediate effect and will remain in force for a period of five years. Besides this eligibility, facilities and tax relief etc. were also indicated. The transmission of Electricity was to be undertaken by the State Electricity Board and even the third party must be HT consumer of the Board unless the stipulation was specifically relaxed. SEB was to purchase the electricity from the producer at the minimum specified rate without any restriction on time or quantum of electricity. Importantly, Clause 3(iii) of the policy guidelines suggested that the producer will have the option to sell the electricity generated by him to a third party at mutuall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G.O. third read above, the Government have accorded certain revised incentives in respect of the Developers with whom Non- Conventional Energy Development Corporation of Andhra Pradesh had already entered into Memoranda of Understanding based on the guidelines existing prior to 15th November, 1995. While reviewing the incentives made available to the sectors, certain representations were received from some of the Non-Conventional Energy Developers, and they have requested for extending the benefits available to other sectors. A review of the incentives made available to various sectors of non-conventional energy was made in the presence of official from Non-Conventional Energy Development Corporation of Andhra Pradesh and Andhra Pradesh State Electricity Board, duly keeping in view the guidelines of Ministry of Non- Conventional Energy Sources, Government of India, dated: 13-9-1993, a view was taken to make available the incentives to all the Non- Conventional Energy Sources uniformly. The Government after careful examination of the recommendations and with a view to encourage generation of electricity from renewable sources of energy hereby allow the following uniform inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be watched for a period of 3 years and at the end of 3 years period from the date of G.O. Ms. No. 93 the Andhra Pradesh State Electricity Board shall come up with suitable proposals for review for further continuance of the incentives in the present form or in a suitable modified manner to achieve the objectives of promotion of power generation through non-conventional sources. 3. Though there is a provision for banking and third party sale, in the absence of conferring the status of licences under Section 3 of the Indian Electricity Act, the Entrepreneurs/ Developers of non-conventional energy power may be handicapped in effecting third party sales to the needy and contracted consumers. therefore, it is hereby ordered that the Entrepreneurs/Developers covered by G.O.Ms. No. 93, dated 18.11.1997 who made the third party sale of energy shall be deemed to be licencees for the purpose under Section 3 of the Electricity Duty Act, 1930 read with Section 28 of Indian Electricity Act. (BY ORDER AND IN THE NAME OF GOVERNOR OF ANDHRA PRADESH) S. SAMPATH SECRETARY TO GOVERNMENT 24. These were the declarations or representations stated to have been made by the State to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on various factors prevailing in the State. 26. Now we will proceed to refer to the various legal provisions relating to purchase price and/or tariff regulations. The principal central legislation in this regard is the Indian Electricity Act, 2003. Under Section 3, a national electricity policy and plan has to be prepared by the Central Government which has to be notified. This plan itself can be reviewed or revised by the appropriate authority under the Act. Section 8 of the Electricity Act, 2003 requires every State to notify and constitute, for the purposes of this Act, a Commission for the State to be known as Electricity Regulatory Commission of that State. Section 86 of this Act spells out the functions of the State Commission. Under Section 86(1)(a) it is to determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk and retail, as the case may be. It is also to regulate electricity purchase and procurement process of distribution licencees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry things to the functions assigned to it under the provisions of the Act. Section 12 of the Act vests the State Govt. with the power to issue policy directions on matters concerning electricity in the State including the overall planning and co- ordination. All policy directions shall be issued by the State Govt. consistent with the objects sought to be achieved by this Act and, accordingly, shall not adversely affect or interfere with the functions and powers of the Regulatory Commission including, but not limited to, determination of the structure of tariffs for supply of electricity to various classes of consumers. The State Govt. is further expected to consult the Regulatory Commission in regard to the proposed legislation or rules concerning any policy direction and shall duly take into account the recommendation by the Regulatory Commission on all such matters. Thus the scheme of these provisions is to grant supremacy to the Regulatory Commission and the State is not expected to take any policy decision or planning which would adversely affect the functioning of the Regulatory Commission or interfere with its functions. This provision also clearly implies that fixation of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of a country upon goods imported or exported; published volume of rate schedules and general terms and conditions under which a product or service will be supplied; a document approved by the responsible regulatory agency listing the terms and conditions including a schedule of prices, under which utility services will be provided. The expression 'purchase price' has to be given its limited meaning, i.e. the price paid for purchasing a good and in the context of the present case, price at which generated electricity will be sold to the specified agencies. The term 'purchase price' indicated in the PPAs, as such, would be a matter within the realm of contract but this is subject to the changes which are contractually and/or even statutorily permissible. Purchase price ultimately would form part of the tariff, as tariff relatable to a licensee or a consumer would have essentially taken into account, the purchase price. The purchase price may not include tariff but tariff would always or is expected to include purchase price. 30. The Regulatory Commission is vested with very vast powers and functions. Section 11 of the Reform Act, 1998 declares fixation of tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for the performance of dual functions by the Commission. Section 61 is the enabling provision for framing of regulations by the Central Commission; the determination of terms and conditions of tariff has been left to the domain of the Regulatory Commissions under Section 61 of the Act whereas actual tariff determination by the Regulatory Commissions is covered by Section 62 of the Act. This aspect is very important for deciding the present case. Specifying the terms and conditions for determination of tariff is an exercise which is different and distinct from actual tariff determination in accordance with the provisions of the Act for supply of electricity by a generating company to a distribution licensee or for transmission of electricity or for wheeling of electricity or for retail sale of electricity. 26. The term tariff is not defined in the 2003 Act. The term tariff includes within its ambit not only the fixation of rates but also the rules and regulations relating to it. If one reads Section 61 with Section 62 of the 2003 Act, it becomes clear that the appropriate Commission shall determine the actual tariff in accordance with the provisions of the Act, including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mongst others, declare the following conclusions (of which we refer only the relevant portions): 7) if regulatory clause is sought to be applied in relation to allocation of power, the same would defeat the de-licensing provisions. Generating companies have the freedom to enter into contract and in particular long term contracts with a distribution company subject to the regulatory provisions contained in the 2003 Act. 8) PPA for a long term is essential for increasing and decreasing the capacity of generation of electricity by the generating company, which purpose by the 2003 Act must be allowed to achieve. 13) Section 86(1)(b) of the 2003 Act clearly shows that the generating company indirectly comes within the purview of regulatory jurisdiction as and when directions are issued to the distributing companies by the appropriate Commission but the same would not mean that while exercising the said jurisdiction, the Commission will bring within its umbrage the generating company also for the purpose of issuance separate direction. 33. In addition to the statutory provisions and the judgments afore referred, we must notice that all the PPAs entered into by the generating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of ₹ 2.25 per unit which was proposed by the Ministry and it was based upon the average cost of generation, as noticed by the authorities, at the relevant point of time. These guidelines were to constitute an attractive package to encourage private sector and the respective States were required to examine and alter or amend the same as conducive to a particular State. Hereafter, a letter dated 25th November, 1994 was again issued by the Ministry to the Managing Director of the Non- Conventional Energy Development Corporation, Andhra Pradesh annexing the guidelines which were subject to be amended. These guidelines itself showed that Electricity Board, which was the competent authority at that relevant point of time, to announce a 'base purchase price' every year for electrical energy purchased by the Board from the non-conventional energy based projects. These guidelines contemplated that the base price shall be escalated at a minimum rate of 5% every year. Clause 2 of the Guidelines stipulated that the promoter or a developer shall be entitled to receive the base price set out in the PPA for all electrical energy delivered for the duration of the PPA. The rate sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reform Act, 1998. This Regulatory Commission was to take over all the functions of the said Electricity Board as well as other authorities for generation, distribution and other matters relating to electricity in the State. This resulted in initiation of suo motu proceedings by the Regulatory Commission for determination and fixation of tariff, which after hearing the parties finally passed the order dated 20th June, 2001. This order as we have already noticed was accepted by all the parties and has not been questioned till date. This order provided for certain variations in the incentives, which as already noticed, are related to the fixation of tariff or purchase price and as stipulated, the Commission considered all objections at some length and ordered that power generated by Non-conventional Energy Developers is not permitted to be sold to third parties and price was kept at ₹ 2.25 per unit price with 5% escalation per annum with 1994-95 as the base year. The parties had entered into agreements i.e. PPAs at different times after passing of this order between June, 2001 to August, 2001 and even thereafter. Thus, at that time, the entire matter between the parties was cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from altering the rates and/or imposing the condition of no sale to third parties. We are unable to find any merit in this contention. In our view, the Tribunal has erred in law in treating these inter-se letters and guidelines between the Government of India, State Government and the Commission/the State Electricity Board as unequivocal commitments to the respondent/purchasers/generators/developers so as to bind the State for all times to come. For the principle of estoppel to be attracted, there has to be a definite and unambiguous representation to a party which then should act thereupon and then alone the consequences in law can follow. In the present case, the policy guidelines issued by the Central Government were the proposals sent to the State Government, which the State Government accepted to consider, amend or alter as per their needs and conditions and then make efforts to achieve the objects of encouraging Non-conventional Energy Generator and Purchasers to enter into this field. These are the matters, which will squarely fall within the competence of the Regulatory Commission/the State Electricity Board at the relevant points of time. Besides that, there was no defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of defence. It can also be the basis of a cause of action. Even if we assume that there was a kind of unequivocal promise or representation to the respondents, the reviews have taken place only after the period specified under the guidelines and/or in the PPAs was over. This is a matter which, primarily, falls in the realm of contract and the parties would be governed by the agreements that they have signed. Once these agreements are singed and are enforceable in law then the contractual obligations cannot be frustrated by the aid of promissory estoppel. 38. Following the judgment of this Court in the case of Union of India v. Indo-Afghan Agencies Ltd. (1968) 2 SCR 366 this Court in the case of Century Spinning and Manufacturing Company Ltd. v. The Ulhasnagar Municipal Council (1970) 1 SCC 582 held that if the promise is made in regard to a present or existing fact, the principle of estoppel can be enforced against the Government. But a promise in relation to a future transaction or act may not fall within the ambit of promissory estoppel. This law was further discussed with some elaboration by the Court in the case of Motilal Padampat Sugar Mills. Co. Ltd. v. State of Utta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch conduct, would be hit by allegans contraria non est audiendus. 40. Lastly, we may refer to a more recent judgment of this Court. In the case of Kusumam Hotels (P) Ltd. v. Kerala Seb (2008) 13 SCC 213 where the Court discussed in some elaboration the different judgments of this Court on the subject and then declined to enforce the principle of promissory estoppel as there was no foundational facts and also indicated that the Government can alter, amend or rescind its policy decision in public interest, the Court held as under: 27. Yet again in U.P. Power Corporation Ltd. v. Sant Steels Alloys (P) Ltd. it was held: (SCC p.800, para 27) 27. In this background, in view of various decisions noticed above, it will appear that the Court's approach in the matter of invoking the principle of promissory estoppel depends on the facts of each case. But the general principle that emerges is that once a representation has been made by one party and the other party acts on that representation and makes investment and thereafter the other party resiles, such act cannot be stated to be fair and reasonable. When the State Government makes a representation and invites the entrepren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts (PPAs) in furtherance of it. In these circumstances, we are unable to accept the argument that the State or the Regulatory Commission or erstwhile State Electricity Board were bound to allow same tariff and permit third party sales for an indefinite period. To this extent, authorities, in any case, would not be bound by the principle of estoppel. 42. Now, we will proceed to examine the merits or otherwise of the findings recorded by the Tribunal that the PPAs executed by the parties, were result of some duress and thus, it will not vest the authorities with the power to review the tariff and other granted incentives. PPAs were executed prior and subsequent to the issuance of the order dated 20th June, 2001. Different persons executed the contracts at different times in full awareness of the terms and conditions of such PPA. To frustrate a contract on the ground of duress or coercion, there has to be definite pleadings which have to be substantiated normally by leading cogent and proper evidence. However, in the case where summary procedure is adopted like the present one, at least some documentary evidence or affidavit ought to have been filed raising this plea of duress sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the generators. Secondly, the generators have already taken benefit of that contract which was based on the policy of the State as well as the order of the Regulatory Commission. Having attained those benefits, it will hardly be of any help to the appellants, particularly, in the facts and circumstances of the case, to substantiate, justify or argue the plea of duress. 43. In the case of Birla Jute Manufacturing Co. v. State of M.P. : (2002) 9 SCC 667 the Supreme Court was concerned with a case where validity of undertaking given under duress was the plea taken by the appellant. This pleading on the same merits and noticing the material, like the present case, the Court held as under: 2. Learned Counsel, appearing for the appellant urged that the undertaking given by the appellant Company was under duress and, therefore, it is not an undertaking in the eyes of law and the appellant is not liable to pay the water charges under such circumstances. There is no material before us to come to this conclusion that the undertaking given by the appellant was under duress. On the contrary we find that the appellant had given the solemn undertaking voluntarily. We, therefore, find no me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of PPAs and the conduct of the respondents over the long period and particularly, while keeping in mind the statutory provisions we are unable to sustain the plea of duress in favour of the respondents. 46. The main emphasis of the judgment of the Tribunal is that the Government had framed the policy under which, incentives were given and as such, the Regulatory Commission had no power and authority to fix tariffs or amend or alter the policy decision of the State. We have already held that in law and in face of the contract between the parties the Regulatory Commission is the Authority to fix the tariff which includes within its ambit the purchase price of the Non-conventional Energy under the policy of the State. It appears that the Tribunal has taken a narrower view of the jurisdiction vested in the Regulatory Commission which is discharging its statutory functions under all the three Acts in accordance with law. In terms of Section 12 of the Reform Act, 1998, which has been referred to by the Tribunal, the power of the Government had been stated. The power available to the Government to issue policy directions has two restrictions. Firstly, the policy direction has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d large, entered into the field of contract simpliciter and their rights are controlled by the contracts executed between them. There is no challenge to these contracts and, therefore, it may be hardly permissible for the Court to go behind these contracts and permit questioning of the statutory jurisdiction vested in the Regulatory Commission. 47. In the case of BSES Ltd. v. Tata Power Co. Ltd. (2004) 1 SCC 195 the Court clearly held that after creation of the Regulatory Commissions under the provisions of the Electricity Regulatory Commission Act, 1998, the Commission has clear power and jurisdiction to fix tariff. The Court should not adopt an interpretation which should neither be strict nor narrower so as to oust the jurisdiction of the Regulatory Commission, as it would defeat the very object of enacting the said Act. The reliance placed by the respondents upon the judgment of this Court in the case of Andhra Pradesh Electricity Regulatory Commission v. R.V.K. Energy Private Limited (2008) 17 SCC 769 is, again, of not much help to them. In that case also, the Court had upheld the exercise of statutory power by the Regulatory Commission. Of course, the Court held that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird party sales was not only creation of a directive issued or approval granted by the Regulatory Commission, but was actually in furtherance to the contract entered into between the parties. Rights and liabilities arising from a binding contract cannot be escaped on the basis of some presumptions or inferences in relation to the facts leading to the execution of the contract between the parties. The jurisdiction of the Regulatory Commission, in the facts of the case, arises not only from the statutory provisions under the different Acts but also in terms of the contract executed between the parties which has binding force. Lastly, but with great emphasis, it was argued on behalf of the respondents that enforcement of the purchase price at the rate determined by the Regulatory Commission along with complete prohibition on the right of the Non-conventional Energy Generator/Developers to sell generated power to the third parties would compel them to shut down their projects. The rates are so unfair that it would result in extinguishment of the power generating units from the State of Andhra Pradesh on the one hand, while on the other, it is bound to prejudicially affect the larger pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in transmission and distribution which has adversely affected the quality and reliability of supply. The two corporations proposed thereunder were to be constituted to perform various functions and to ensure efficiency and social object of ensuring a fair deal to the customer. These objects and reasons clearly postulated the need for introduction of private sector into the field of generation and distribution of energy in the State. Efficiency in performance and economic utilization of resources to ensure satisfactory supply to the public at large is the paramount concern of the State as well as the Regulatory Commission. The policy decisions of these constituents are to be in conformity with the object of the Act. Thus, it is necessary that the Regulatory Commission, in view of this object, take practical decisions which would help in ensuring existence of these units rather than their extinguishment as alleged. 52. In view of our above detailed discussion, we dispose of these appeals with the following order: (a) The order of the Tribunal dated 2nd June, 2006 is hereby set aside. (a) We hold that the Andhra Pradesh Electricity Regulatory Commission has the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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