TMI Blog2004 (4) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... o three Companies. Respondent No. 2 is Government of Karnataka (GOK). 2. Pursuant to the Notifications and the subsequent clarifications issued by the Government of India in March 1992 setting out the norms for determining the tariff payable to the generating Companies, by an order dated 7th March, 1994, approval was granted by GOK to the appellant for setting up a power project of 300 MW and selling power directly to industrial units, with the balance to KPTCL (the erstwhile KEB). As per the tariff fixed according to the norms laid down by Government of India (GoI), the order stated various advantages of setting up of the power project in the region. The order laid-down the guidelines and conditions on which approval was granted to the appellant. The Detailed Project Report (DPR) of the appellant, the order of GOK dated 7th March, 1994 and affidavit dated 10th October, 2001 of KPTCL filed before the Karnataka Electricity Regulatory Commission, Bangalore, for short, 'the Commission', would bring out the acute power shortage in the State of Karnataka and show justification for securing needed power for the State grid. The DPR states that the project was set up to supply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnataka State Pollution Control Board for setting up an Independent Power Plant. The power plant was the first major Independent Power Producer in the private sector using a combination of cortex gas and coal as fuel in the State of Karnataka and was established under international competitive bidding. With the support of KPTCL and the GoK, the Techno-Economic clearance was obtained from the CEA by the appellant for establishing of the Power Plant of 2X130MW. 3. On 20th October, 1998 tariff calculations for 20 years and proposal for sale of power on the basis of GOI Notification with a rebate on Two-Part tariff was submitted by the appellant to KEB, with a request to grant the approval for the same. By its letter dated 21st November, 1998, the appellant submitted its offer for sale of power to KPTCL giving various options, including an offer with discount on Two-Part tariff. As per Two-Part tariff norms stipulated by GoI/CEA, for initial period of 5 years, tariff fixed was ₹ 2.90 per unit allowing escalation at 5% from the second year onwards. KEB by its letter dated 1st December, 1998 stated that it was in principle willing to purchase power from the appellant and the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 approved tariff at ₹ 2.60 per unit with escalation of 5% each year, on the basis of the least cost tariff criterion for a term of 5 years. 5. When the matter stood thus pursuant to the enactment of the Karnataka Electricity Reforms Act, 1999, for short the Act , the Commission came into existence with effect from 1st June, 1999 Several rounds of discussions took place between the parties to finalise other terms and conditions (apart from tariff, escalation and tenure) of the PPA. While the terms were being discussed between the appellant and KPTCL, both the parties performed their respective obligations of selling and purchasing power and payments were also made at the rate of ₹ 2.60 per unit as per the contract dated 12th May, 1999. During this period, CRISIL was appointed by the KPTCL as its internal consultant to review the tariff rate of ₹ 2.60 per unit. CRISIL's report suggested lower tariff and based on the said report the tariff was reduced to ₹ 2.52 by GOK. On re-examination of CRISIL's report, GoK rejected the findings in the report and GoK itself revised the tariff to ₹ 2.60 per unit so as to honor its contractual obligations ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court by its order dated 19th December, 2002. Thereafterwards, the appellant has filed a memo with a request to expunge certain remarks in the Interim Order by this Court dated 19th December, 2002 which are said to be adverse to the appellant. 10. Before we refer to the contentions of the learned Counsel for the parties, it is appropriate that we should consider I.A-II of 2002 filed by the appellant under Order 41, Rule 27, read with Section 151 CPC for production of additional documentary evidence. The said IA was filed on 31.07.2002. Although the said IA was posted before the Court for hearing and orders umpteen numbers of time, commencing from 17.08.2002 and onwards, somehow, no order was made on the IA. Records disclose that none of the respondents have filed any statement of objections to I.A-II of 2002. In paragraphs 4 and 5 of the affidavit filed in support of the IA it is stated thus: 4. The Impugned Orders are passed by the Hon'ble Commission without considering the defense raised by the Appellant and the objections stated in its letter dated 20th June 2002. The Hon'ble Commission has passed the Impugned Order without any reasons on various issues and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even assuming that the Commission can be impleaded as a party to the appeal because its orders are impugned in the appeal, nevertheless, the Commission cannot be permitted and is not entitled to contest the appeal on merits. Elaborating the above contention, Dr. Singhvi would contend that the Commission being a statutory adjudicatory authority cannot take sides with the contesting parties on merits and it should leave it to the concerned parties to work-out legal remedies against its orders by way of appeal or otherwise. Dr. Singhvi would emphasize that if the Commission is allowed to contest the issue brought before this Court on merits, its image as an impartial statutory authority which is vested with power to determine tariff affecting the rights of the parties would be impaired and its integrity would be doubted. Looking from that angle also, Dr. Singhvi would contend that it is highly improper, unfair and unjust for the Commission to put in appearance through a counsel in this appeal, file statement of objections and contest the appeal on merits with abnormal tenacity and contentiously Dr. Singhvi would contend that a bar should be imposed on the Commission by this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be applied. Dr. Singhvi would point out that GOI policy guarantees 16% return of equity at Plant Load Factor of 68.5% and provides incentive for higher Plant load Factor and the above rates are in line with the rates obtaining in other generating Companies. Since the appellant has performed its part of the contract on the belief that it would be entitled to the performance of reciprocal promises made by KPTCL and GoK, the KPTCL and GoK should be estopped from going back upon promises made to the appellant. Dr. Singhvi would also point out that the terms of tariff agreement entered into between the parties is quite reasonable and they in no way affect the public interest. On the other hand, according to Dr. Singhvi the consumers of Karnataka are getting power at the cheapest rate available in the state. 14. Sri Nagananda appearing for the KPTCL, on the other hand, would contend that the contention of the appellant that there was a concluded contract on tariff even before the Act came into force is untenable. The proposal of the appellant for the sale of power dated 31.3.1999 itself makes the offer conditional on the approval of the Board of the Company and approval of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with or incidental thereto. The Statement of Objects and Reasons of the Act reflects this position loudly. Although the Commission performs and discharges various functions and acts in multiple capacity, when it fixes rates or tariffs, it acts in a purely legislative capacity and, therefore, the impugned order of the Commission cannot be treated as an outcome of the exercise of quasi-judicial power by the Commission as contended by learned Senior Counsel for the appellant. Sri Raghavan would vehemently contend that the Commission has not only the power, but also the duty to defend its orders fixing the rates or tariffs before appellate fora, According to him, the Commission while fixing the tariff does not adjudicate a lis between the parties, but only provides a hearing to all the stakeholders. Sri Raghavan would further contend that the scheme of the Act would clearly indicate that the tariff at which the licensee purchases power has a direct effect on the tariff that the licensee can charge to the consuming public. Since the Commission is a custodian or trustee of consumer interest, the right to defend its order before this Court cannot be denied. Since it is the considered opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... add that the impugned tariff fixation by the Commission is essentially in the nature of a legislative function and, therefore, the Court is bound to show deference and cannot lightly interfere with such function. 18. Sri Pramod Khatavi, learned Counsel appearing for Respondent No. 4, Sri X.M. Joseph, learned Counsel appearing for Respondent No. 6 and Sri V.K. Somashekar, learned Counsel appearing for Respondent No. 7 would adopt the arguments of Sri Nagananda and Sri K.G. Raghavan. 19. After hearing the learned Counsel for the parties, following points arise for decision: (I) Whether the Karnataka Electricity Regulatory Commission-Respondent No. 3 can be added as a party respondent to the appeal and whether it is entitled to defend the impugned order on merits? (II) Whether there existed a binding contract between the appellant and the KPTCL on the tariff prior to commencement of Karnataka Electricity Reform Act, 1999 with effect from 01.06.1999, in terms of Explanation to Section 19 and proviso to Section 27(2) of the Act? if the answer is in the positive, whether the Commission has jurisdiction to review the tariff particularly when the proviso to Sub-section(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. Therefore, a quasi-judicial authority cannot take side when its quasi-judicial order is assailed before the Appellate Court and it should leave it to the parties to work out legal remedies available to them. It is highlighted that if a quasi-judicial authority is permitted to defend its own order before the Court above, it would send a wrong signal to all the concerned that, that quasi-judicial authority is taking sides and that it is abnormally interested in upholding the correctness and legality of its order. Coming to the facts of this case, it is further urged that even assuming that in tariff fixation the Commission is required to take public interest in general and the interest of the consumers in particular, having regard to the sources and strength of the contesting parties- KPTCL and GoK in this appeal to defend the impugned orders effectively, there is absolutely no necessity for the Commission to put in appearance and defend its own order as if there is nobody to defend the impugned orders. 22. Per contra, Sri Raghavan, learned Counsel for the Commission would submit that the Commission has four broad functions under the Act, viz. (i) Licensing under Sections 18, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty-respondent to the appeal and to defend the impugned order. 24. It is well settled by the judgments of the Supreme Court in UDIT NARAYAN SINGH v. BOARD OF REVENUE,: AIR1963SC786 , MUHAMMED EAMUAL HAQUE v. MUHAMMED J. HUSSAIN, Civil Appeal No. 985 of 1963 decided on 5.5.1964 (SC), PEPSI FOODS LTD. v. SPECIAL JUDICIAL MAGISTRATE AND ORS.,: 1998CriLJ1 , JASBIR K SEHGAL v. DISTRICT JUDGE DEHRADUN,: AIR1997SC3397 , MD. OMER v. S. NOORUDIN,: AIR1952Bom165 , R.T. AUTHORITY v. SRI RAM,: AIR1974All140 and PUZHAKKAL EDAM ALIAS PUTHEW EDON v. KUNCHAPPAN,: AIR1974Ker210 that when an order of a Court or quasi-Judicial body is assailed before an Appellate Court or an Appellate Forum, such Court or quasi-judicial body need not be made as a party to the proceedings. 25. The Supreme Court in UDIT NARAYAN SINGH'S case (supra) held that in an appeal against the decree of a subordinate Court, the Court that passed the decree need not be made a party. The Supreme Court made a distinction between an appeal against a decree or an order and a writ of certiorari to quash the order of a Tribunal or authority. Since this appeal is a regular statutory appeal preferred to this Court under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the judgment of Punjab High Court in HUDI GOSHAON v. SUDI GOSHOAN, judgment of the Supreme Court in UDIT NARAYAN SINGHs case (supra), the judgment of a Division Bench of Gujarat High Court in GOPI CHAND v. WESTERN RAILWAY, AIR 1567 GUJ 27, and the judgment of the Supreme Court in MOHAMMED ENAMUAL HAQUE's case (supra), in paragraph-9 of the judgment concluded thus. I think that, in the light of the above authorities, the proposition is well-settled that the Court or tribunal whose order is sought to be revised under Article 227 of the Constitution is not a necessary party to the proceeding before the High Court. The objection raised by the respondent to the maintainability of this Original Petition cannot, therefore, succeed. 29. It is also well settled by the judgments of the Supreme Court in SHRI SITARAM SUGAR MILLS LTD. v. UNION OF INDIA,: [1990]1SCR909 and JASWANT SUGAR MILLS v. LAXMI CHAND,: (1963)ILLJ524SC , the price fixation for a manufacture is adjudicative function whereas price fixation for consumers of manufactured goods as a class is a legislative function. Under the Essential Commodities Act, it has been held that price fixation for a manufacture is adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are administrative or quasi-judicial. This position is well settled by the judgment of the Supreme Court in INDIAN NATIONAL CONGRESS v. INSTITUTE OF SOCIAL WELFARE.,: [2002]3SCR1040 It is also well settled that if a statutory authority is required to take a decision only after holding an enquiry, such statutory authority is required to act judiciously and the decision that may be given by such statutory authority, will be quasi judicial in nature, even in the absence of any lis or contest between the contending parties before it. The Commission under the Act performs judicial functions in pursuance of the powers conferred upon it under Sections 9, 10, 11, 29, 30, 31, 32, 39, 41, 42, 43, 46, 52 and 54 of the Act. The provisions of the Act clearly indicate that the Commission has the trappings of the Civil Court. The Commission functioned as a quasi-judicial forum while passing the impugned orders. Inasmuch as by virtue of the judgments of the Supreme Court in PROVINCE OF BOMBAY v. KUSHALDAS ADVANI,: [1950]1SCR621 and BOARD OF REVENUE v. VIDYAWATI,: AIR1962SC1217 , the Commission is required to act judiciously in fixing tariff for a generator and supplier of electricity, the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. When validity of an order of a quasi- judicial authority or of an order of an authority which is required to be made judiciously is assailed in a Court of law or an appellate forum, it is healthy and fair that such authority should not take side and it should leave the validity of its order to the Court or appellate forum, as the case may be, for determination unless the statute which has created the authority itself directs the authority to put in appearance before the Court or the appellate forum and defend its order. The Act does not direct the Commission to do so in an appeal preferred against its order under Section 41 of the Act. Be that as it may, even otherwise, we do not find any justification for the Commission to file on its own quite extensive pleadings, engage a senior counsel and contest the appeal exhibiting an abnormal interest normally unknown to the statutory authorities performing quasi-judicial functions and expending its considerable resources as if it is more affected than the affected interests thereby meaning the consumers of electricity and the KPTCL. The contesting respondents KPTCL and the Government of Karnataka are not hapless or helpless parties wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmed by the final Court of appeal. But as I said before, this Court neither needs illumination nor guidance from the Judge of the first instance as to what are the errors in the judgment of the lower appellate Court. (emphasis supplied by us) We may add to the above underlined understandably emphatic lines of Chagla CJ that though the Courts show deference to the opinions of the experts and those who are supposed to be experts in highly evolved fields of human knowledge in great measures and use them as aid in the decision-making, these expert bodies should not forget that we are ruled by the Rule of law and not by expert opinion. Although the Courts are not experts, they are empowered by the Constitution and the Law to review and sit in judgment over the opinions and orders of expert bodies and determine the legality of their opinions, actions and orders. The Courts cannot abdicate that power and refuse to review the impugned decisions of the experts on the specious plea that the Courts are not experts. These observations of ours would dispose off the contention of Sri Raghavan that the Commission is a body of experts and, therefore, the findings recorded by such a body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, which is an integral part of any judicial or quasi-judicial process should be preserved and protected jealously. If it is lost and the Court finds that the decision-maker dealt with the issue with closed mind or predetermination of the issue, only on that count, it will invalidate the action of the decision-maker. The Commission after being a Judge of an original Court cannot take the role of a Prosecutor in an appeal and cannot be allowed to defend its own findings as a quasi-judicial authority. 34. Sri Raghavan, however, would contend that the entitlement of the Commission to appear in this appeal and to defend the impugned orders cannot be doubted in the light of the judgment of the Supreme Court in WEST BENGAL ELECTRICITY REGULATORY COMMISSION (supra). In the above case, WEST BENGAL ELECTRICITY REGULATORY COMMISSION (WBERC), by its order dated 07.11.2001 determined the tariff for the sale of electricity by Calcutta Electricity Supply Company Ltd. Being aggrieved by the said determination of tariff, the Company preferred an appeal before the High Court of Calcutta. In fact, the respondent Company had itself impleaded the Commission as a party respondent to the appeal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision. This appeal does not involve validity or interpretation of provisions of the Act or the Regulations framed thereunder. What essentially arises in the appeal for decision-making is the validity and legality of the tariff fixed by the Commission. 35. In conclusion, we hold that the Commission is not a necessary and proper party to the appeal having regard to the questions that arise for decision in the appeal. There are no allegations of personal bias against the Chairman or against the members of the Commission. Therefore, we are unable to understand why the Commission should be made a party to the appeal. We would, therefore, strike out the name of the 3rd respondent from the array of the parties. In doing so, we are guided by what the Hon'ble Supreme Court did in para 27 of the judgment in PEPSI FOODS LTD. AND ANR. v. SPECIAL JUDICIAL MAGISTRATE AND ORS. (supra). By the above observations of ours, we should not be understood to have held that the Commission cannot be a necessary and proper party to an appeal preferred against its order under Section 41 of the Act regardless of nature of questions that may arise in an appeal for decision-making. POINT No. II: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in the letter dated 5th March 1999 asking KPTCL to negotiate a single fixed tariff for 5 years instead of two-part tariff. (viii) The acceptance of the terms of the offer made by the appellant by KPTCL at the meeting held on 26.03.1999. (ix) The formal proposal of the appellant contained in its letter dated 31.03.1999 incorporating the terms settled at the meeting and containing the final offer of supplying 100 MW of power on single part tariff basis at the rate of ₹ 2.60 per unit with escalation of 5% per annum for a period of 5 years. (x) The letter of KPTCL dated 23.04.1999 giving the following two options to the GoK after its negotiations with the appellant: (a) fixed cost being escalated by 5% per annum and the variable cost being a pass through, (b) tariff at ₹ 2.60 per unit inclusive of fixed and variable costs with escalation of 5% per annum. As could be seen from the above letter of the KPTCL, the KPTCL having opined that the rupee was depreciating heavily against American dollar, suggested that the single-part fixed tariff option of ₹ 2.60 per unit be approved inasmuch as it would be more advantageous to it. (xi) Admission of the KPTC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions of the PPA except tariff because the tariff was already agreed upon by the parties and the GoK too accepted the proposal of the KPTCL and issued the G.O dated 12th May, 1999 according its approval. The PPA was entered between the parties on 7th November 2000, which incorporated all the agreed terms of the GO dated 12th May, 1999. After signing the PPA, the KPTCL took steps to open letter of Credit as a security for payment based on the tariff of ₹ 2.60 per unit with escalation of 5% per annum without waiting for the approval of the Commission, as the same was not required as far as the tariff of ₹ 2.60 per unit was concerned. Further, the letter dated 4th January 2000 of KEB to the appellant requiring the break-up of the negotiated tariff of ₹ 2.60 per Kwhr. letter dated 4th April 2000 of the appellant, letters dated 12th April, 2000 and 24th May, 2000 of KPTCL relating to supply of power pending finalization of PPA show the intention of the parties to treat the letter of the GoK dated 12th May, 1999 as the binding contract as far as tariff was concerned. 40. In ALEXANDER BROGDEN AND ORS. v. THE DIRECTORS, C, OF THE METROPOLITAN RAILWAY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are, however, cases where the reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton, (1857) 6 HLC, 238 at Page 263, the fact of a subsequent agreement being prepared may be evidence that the previous negotiation, did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement'. The Supreme Court in the said judgment has extracted the observations of Parker J. in the case of ALEXANDER(supra) extracted by us supra, with approval. Further, the Supreme Court has also refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual rates and also made the required deposit. Later the plaintiff was informed that his tender for the purchase of inferior cocoons alone was accepted and was asked to remit a further amount equivalent to 1/10th of the value of the accepted tender. A date was also given before which the cocoon should be removed. The plaintiff was dissatisfied by the rejection of his tender for double cocoons did not remove on payment and the Government issued notice of resale and they were actually sold. The Government called upon the plaintiff to make good the loss and informed him that in case of failure the same would be recovered under Section 52 of the Madras Revenue Recovery Act. It was contended that there was no concluded contract and as such he was entitled for refund of earnest money and that Section 52 Madras Revenue Recovery Act could not be resorted unless it filed a suit and obtained a decree to recover damages from the plaintiff. This Court dealing with the above contention held that the offer made by the plaintiff in pursuance of the tender notice was accepted by the Government and that the acceptance of the offer was duly communicated to the plaintiff. It was sufficient in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the main provision. Therefore, the proviso to Section 27(2) is only for the purpose of Section 27(2) i.e. for factors relating to tariff determination. It is a rule of interpretation that a proviso has to be strictly construed and it has no existence apart from the provision it is designed to limit or quality. Even if the language of proviso is general, it is to be construed in relation to the subject matter covered by the Section to which the proviso is appended. The proviso to Section 27(2) is nothing but an exception to the enacting clause on tariff determination and the object of the proviso is to qualify something which has gone before. The proviso cannot deal with any other field which the Section itself does not deal with. The correct interpretation as far as 'contracts concluded' is concerned, is that the proviso to Section 27(2) would refer to tariff which is agreed between the parties before the Commission came into existence and a PPA is not required to be executed for the same. The proviso to Section 27(2) is for the purposes of giving binding effect to the contract concluded on tariff; which was concluded by the GOK order dated 12th May, 1999 before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to no other. The judgment of the Supreme Court in MACKINNON MACKENZIE CO. LTD. v. AUDREY D'COSTA AND ANR.,: (1987)ILLJ536SC is also to the same effect. The Supreme Court held that the proviso to Sub-section (3) of Section 4 of the Equal Remuneration Act, 1976 cannot travel beyond the provision to which it is a proviso. 49. The principles of interpretation of statutes enunciated by the Supreme Court in the above cases are the binding authorities to state that the proviso to Sub-section (2) of Section 27 of the Act is required to be restricted only to tariff determination and does not require a PPA to establish a concluded contract. 50. In this case the offer made by the appellant with regard to the tariff was accepted by the KPTCL and Gok after internal negotiations and the parties implemented and effectuated the terms of the contract. It is well settled that when an offer is made and acceptance does not extend to all the terms which are accepted, a contract is concluded on the terms accepted by the offeree, as the offeror did not insist on terms of the offer which were not accepted by the offeree. Even though there was no elaborate description of the rights and obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of it, B must be held liable upon it 52. In SHRI RAMA METAL WORKS AND ORS. v. THE NATIONAL SMALL INDUSTRIES CORPORATION LTD,: AIR1977Kant24 Government Company B was established to assist small industries by arranging supply of machinery on hire purchase in terms of its scheme and firm A which was aware of the terms applied to B to supply on hire purchase lathe machine manufactured by C and requested B to instruct C to deliver the machine to A and assured B that it was prepared to sign the necessary documents in respect of the transaction. B issued delivery instructions to C and forwarded to A agreement forms and a statement of account particularising the total price and the amount of first and subsequent installments which was accepted by A. A received the machine but failed to execute the agreement forms and pay the price whereupon B filed a suit to recover the price. In the premise of these facts, the Division Bench of this Court speaking through M. N. Venkatachaliah, J., as he then was, held that the parties had reached a completed hire purchase agreement through correspondence and the delivery of the machine was in pursuance of it and the signing of further formal agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant subject to the approval of the Board and Lenders was not a condition precedent to the formation of the contract. They were conditions for the benefit of the appellant and could be waived by the appellant. The Supreme Court in JIWANLAL v. BRIJ MOHAN,: [1973]2SCR230 held that if the condition is for the exclusive benefit of one contracting party and does not create any liability against the other, the condition can be unilaterally waived by the party. It needs to be noticed that in this case, neither of the parties insisted on the satisfaction of the conditions before supplying power. The order of GOK does not include the word subject to neither does the PPA contain the conditions which have been referred to by the respondent as conditions precedent. As regards acceptance by the GoK, the KPTCL's letter dated 1st December, 1998 and letter dated 19th January 1999 and averments in paras 5 and 6 of the Statement of Objections of the KPTCL clearly show that the rate was accepted by the KPTCL and then it recommended to the GoK to approve its decision. Therefore, the acceptance by the KPTCL was prior to 01.06.1999 Terms such as escrow, deemed generation etc were not considered e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formal agreement was signed. Instead the parties performed their respective obligations in absence of the formal document and payments were also made for the same. Further, in this case, all the material terms essential for the performance of the contract were agreed upon and the parties were ad idem which created a binding contract. Terms such as Escrow, deemed generation were for the benefit of the appellant and, therefore they could be unilaterally waived by the appellant as held by the Supreme Court in the case of JIWAN LAL (supra). Further, the documents produced in the case would show that the parties did not insist on those terms and conditions. It is a matter of record that even in the absence of those terms, the parties continued to perform their respective obligations for 3 years, and, therefore those terms cannot be termed as essential to the contract. 56. We having considered the entire documentary evidence on record, the facts and circumstances of the case and the conduct of the parties at various stages of making of the contract, are satisfied that there existed a concluded and binding contract between the appellant and the KPTCL with regard to tariff well- before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure for payment of charges for supply of electricity was to be a standard procedure followed in case of IPP projects. 58. If the appellant was a CPP, they would have setup a 140 MW plant to meet the requirements of JVSL and not a 260 MW plant. The 260 MWs plant was conceived in order to provide 'firm' capacity to the KPTCL as is evident from the approval of the Gok to the power plant dated 7th March 1994. DPR provides that the requirement of the steel plant was only 150 MWs and balance 110 MWs will be supplied to KEB to reduce the power deficit in the State. This position is confirmed in the affidavit of the KPTCL dated 18th October 2001 filed before the Commission. The order of the GOK dated 12th May 1999 refers to (i) Wheeling and Banking Agreement pursuant to which, the appellant offered excess firm capacity to KEB and (ii) letter dated 19th January 1999 of KPTCL to GoK informing GOK of appellant's offer of 100 MWs on a guaranteed basis at ₹ 2.90 per unit. If the appellant was a CPP it could riot have dedicated firm capacity to KPTCL and guaranteed continuous supply of power. Since the plant was an IPP, penalties were to be imposed on the appellant for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PPA was signed with KPTCL. After the PPA was entered into with KPTCL and after the exist of the foreign shareholders, the appellant and the JVSL amended the terms of the agreement. The DPR provides that the peak requirement of the steel plant is only 150 MW and the balance of 110 MW would be supplied to the State grid in order to reduce the power deficit in the State. The Commission has arrived at 1637 MUs at 77% PLF and fixed charges for 1150 MUs supplied to KPTCL ignoring the fact that the appellant has been supplying the energy to JVSL at 85% PLF. Such a direction has been given because of the wrong conclusion that the appellant is a CPP. It needs to be noticed that KPTCL is required to pay fixed charges on a pro rata basis to JVSL for the capacity guaranteed by it 64. The materials produced in the case and the circumstances noticed above would show that the status of power plant is that of an IPP and not CPP. POINT NO. IV: 65. It is the contention of the appellant that the impugned order suffers from certain errors apparent on its face. The question is whether the allegation of the appellant is justified. In CLERKS AND DEPOT CASHIERS OF THE CALCUTTA TRAMWAYS CO. LTD. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a single-part tariff basis. The tariff proposed by the appellant was fixed on the basis of a single-part tariff at the instance of KPTCL and GoK and, therefore, it is not open for the Commission to arbitrarily apply elements of two-part tariff to reduce the single-part tariff of the appellant, because, uniform application of the two-part tariff would result in a tariff rate of ₹ 3.16 per unit which would have been much higher than ₹ 2.60 per unit. According to the appellant, the tariff of the appellant is one of the cheapest as it is based on the least cost tariff basis, whereas other companies in the State are being paid higher charges either on the basis of two-part tariff or a fixed negotiated tariff; This assertion made by the appellant in the pleading is not seriously disputed by the respondents. Therefore, there is some substance in the contention of Dr. Singhvi that the treatment meted out to the appellants tantamounts to invidious discrimination and arbitrariness. 67. We also find some force in the grievance of the appellants that the Commission in passing the impugned order has taken into account irrelevant considerations and has left out relevant consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in its calculations, whereas more than 900 MUs have been supplied by the appellant to KPTCL for the years 2000-2001 and 2001-2002. 69. The Grid Support Charges payable by KPTCL to the appellant were agreed under the Wheeling and Banking Agreement in 1996 before the establishment of the Commission. The Commission, therefore, is not justified in unilaterally reviewing the Grid. Support Charges without any basis and justification. The action of the Commission in reviewing the Grid Support Charges payable to the appellant by KPTCL is without justification and ultra vires the Act. From the records we also find that the objections of the appellant filed before the first impugned order was passed, were not considered by the Commission. Thus objections have been rejected by the Commission without giving any reason by merely stating that those issues raised in the objections were dealt with in sufficient length in the first impugned order. This statement is factually incorrect. 70. It is well settled that except in cases where the requirement of giving reasons has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi-judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e doctrine of legitimate expectation evolved in England has been followed in most of English-speaking countries, including India. This doctrine is an offshoot of the general doctrine that every public authority must act fairly and reasonably. The plea of legitimate expectation provides a sufficient interest to a person to enable him to move for judicial remedies in a case where he cannot point to the existence of a substantive right to obtain such remedies. In other words, as per the doctrine, even where a person claiming some benefit or privilege has no legal right to it, he may have a legitimate expectation of receiving the benefit or privilege as a matter of public law, in which case the Courts will insist on a fair Procedure. 73. Having noticed briefly the doctrine of promissory estoppel and doctrine of legitimate expectation, let us have a look at the facts and circumstances of the case, in order to see whether there is any justification in the grievance of the appellant. Policy framed by the GoI guarantees 16% return equity at Plant Load Factor of 68.5% and provides incentive for a higher Plant Load Factor. It is the contention of Dr. Singhvi that it was the legitimate exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it on which he has been given an opportunity to comment; or (ii) he has received assurance from the decision-maker that it will not be withdrawn without giving him first an opportunity of advancing reasons for contending that it should not be withdrawn . 75. In MOTILAL PADAMPAT SUGAR MILLS CO. LTD. v. THE STATE OF UTTAR PRADESH AND ORS.,: [1979]118ITR326(SC) in paragraph-24 of the judgment, the Supreme Court held: The law may therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one, howsoever ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
