9911796707
TMI Blog2015 (5) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... are filed seeking to assail the order dated 31.08.2012, passed by the High Court of Rajasthan at Jaipur, in D.B. Civil Writ Petition No. 10911 of 2012 and batch matters, whereby, the High Court has upheld the validity of the Rajasthan Electricity Regulatory Commission (Renewable Energy Obligation) Regulations, 2007 and Rajasthan Electricity Regulatory Commission (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010, directing the Appellants to purchase minimum energy from renewable sources and comply with their liability under the said Regulations. 3. Brief facts which led to the filing of these cases are as under: The Appellants in this group of appeals are companies engaged in the business of production, manufacturing, selling non-ferrous metals, zinc and their by-products. They have established their own captive generation power plants in terms of the Electricity Act, 2003 (for brevity 'Act of 2003'). The Rajasthan Electricity Regulatory Commission (for brevity 'RERC') in exercise of its power Under Sections 61, 66, 86(1)(e) and 181 of the Act of 2003, vide Notifications dated 23.3.2007 and 23.12.2010, framed R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e participation of private sectors involved in generation of electricity and with that objective, generation of electricity was de-licensed and captive generation was freely promoted and in this manner the impugned Regulations are violative of the basic object and intendment with which the Act was enacted. Further, it has been asserted that the National Electricity Policy, 2005 as well as the Tariff Policy, 2006 were framed to promote production of energy and utilization thereof to the maximum extent in respect of the captive generation plants and not to compulsorily force them to lower down their production of energy by making them purchase renewable energy as per the newly framed the impugned Regulation No. 9 of Regulations 2010. It was also contended by them that the Act of 2003 has totally liberalized the establishment of captive power plants and kept them out of any licensing and regulatory regime, neither any licence nor any approval from any authority is required to install a captive power plant and thus, the RERC had no jurisdiction to impose any obligation for compulsory purchase of electricity from a renewable energy source; the renewable energy source and captive generat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is contrary to the object and intendment sought to be achieved under the provisions of the Act of 2003 and the same is also opposed to the National Electricity Policy, 2005 and the Tariff Policy, 2006. 9. The learned senior Counsel on behalf of the Appellants has further placed strong reliance upon the Preamble of the Act of 2003, which inter alia provides for the promotion of efficient and environmentally benign policies and also placed strong reliance upon the definitions under provisions of the Act of 2003, namely, Section 2(3) - 'area of supply', Section 2(17) - 'distribution licensee' and Section 9 - 'captive generation'. Strong reliance has been placed upon the said provisions of the Act to substantiate the legal position. Section 9 of the Act of 2003 provides that notwithstanding anything contained in the Act of 2003, a person may construct, maintain or operate a captive generating plant and dedicated transmission lines provided that supply of electricity from the Captive Generating Plant through the grid shall be regulated in the same manner as the generating station of a generating company. Second proviso to Section 9 further provides that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 2003 which emphasize upon promotion of efficient and environmentally benign policies and encourage generation and consumption of green energy to sub-serve the mandate of Article 21 read with Article 51A(g) of the Constitution of India. Further, it is consistent with the international obligation of India to protect environment. It was argued that the impugned Regulation is in consonance with law, which impose reasonable restriction as provided Under Article 19(6) of Constitution of India. It was stated that the captive power consumers and open access consumers are 'consumers of electricity in the area of distribution licensee' and they are connected to the network of the said distribution licensee and can also demand power as and when they require it and a distribution licensee is obligated to supply power to Captive Power Plant and open access consumers Under Section 43 of the Act of 2003. It is therefore contended that in such circumstances it would be highly discriminatory to subject only the regular consumers of the distribution licensee to bear the cost of Renewable Purchase Obligation (RPO). They contended that the Appellants have not disclosed to this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution licensee which is limited by boundaries shall be under obligation to purchase electricity from renewable sources at a percentage of their total consumption as specified in the RPO Regulations. The contention of the Respondents is that the use of the distribution line by the consumer is irrelevant since the use of line would only generate wheeling charges to be charged by the DISCOM. Therefore, if a captive consumer does not use the line of the DISCOM, the said licensee cannot charge the wheeling charges. However, this does not mean that the said consumer is not in the area of licensee. In line with Section 86(1)(e) of the Act of 2003, Para 5.12.2 of the Electricity Policy clearly provides that the Regulatory Commission will specify a percentage of the total consumption of Electricity in the area of a Distribution Licensee to be purchased from the non-conventional sources of energy which includes Renewable Sources. The wide language used by the Legislature in Section 86(1)(e) of the Act which has been incorporated in Para 5.12.2 of the Electricity Policy makes it evident that the emphasis is on the total consumption of energy in the area of Distribution Licensee. The mandate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mental duties to protect and maintain environment in the area to facilitate the residents and living creatures to live peacefully. Reliance has rightly been placed upon the decision of the judgment of this Court in the case of Society For Unaided Pvt. Schools of Rajasthan v. U.O.I. and Anr. (2012) 6 SCC 1 as under: 252. Rights protected Under Article 19(1)(g) are fundamental in nature, inherent and are sacred and valuable rights of citizens which can be abridged only to the extent that is necessary to ensure public peace, health, morality etc. and to the extent of the constitutional limitation provided in that article. XXX 255. Parliament can enact a social legislation to give effect to the directive principles of State policy.... 17. The contention urged by learned senior Counsel on behalf of the Appellants/owners of captive generating plants is that the RERC does not have jurisdiction Under Section 86(1)(e) read with Section 181 of the Act of 2003 to frame the impugned Regulation in respect of the industries running their own Captive Power Plants and it has the power only to frame Regulations with respect to the distribution licensees and, therefore, it was not open for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectricity. Whereas generation of electricity has been brought outside the purview of the licensing regime, the transmission, distribution and trading are subject to grant of licence and are kept within the regulatory regime. The statute provides for measures to be taken which would be conducive to development of electricity industry. Measures are also required to be taken for promoting competition which would also mean the development of electricity industry. It, indisputably, provides for measures relating to the protection of interest of consumers and supply of electricity to all areas. XXX 81. Delicensing of generation as also grant of free permission for captive generation is one of the main features of the 2003 Act. It is clearly provided that only hydro-generating projects would need the approval of the State Commission and the Central Electricity Regulatory Authority. It recognised the need of prohibiting transmission licensees. It also for the first time provided for open access in transmission from the outset. It even provides where the distribution licensee proposes to undertake distribution of electricity for a specified area within the area of supply through anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the provisions of the said Act. 26. We may, in this connection refer to a decision of this Court in Kunj Behari Lal Butail v. State of H.P. wherein a three-Judge Bench of this Court held as under: 14. We are also of the opinion that a delegated power to legislate by making rules 'for carrying out the purposes of the Act' is a general delegation without laying down any guidelines; it cannot be so exercised as to bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself. [See also State of Kerala v. Unni and A.P. Electricity Regulatory Commission v. R.V.K. Energy (P) Ltd.] 27. The power of the Regulation-making authority, thus, must be interpreted keeping in view the provisions of the Act. The Act is silent as regards conditions for grant of licence. It does not lay down any pre-qualifications therefor. Provisions for imposition of general conditions of licence or conditions laying down the pre-qualifications therefor and/or the conditions/qualifications for grant or revocation of licence, in absence of such a clear provision may be held to be laying down guidelines by necessary implication providing fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 upon which reliance was placed by the learned Counsel on behalf of the Appellants wherein in support of their proposition of law that this Court held that what cannot be done directly cannot be done indirectly by the Regulatory Commission. The said principle has no application to the present case, which is sought to be applied to the facts of the case of the Appellants. 25. Further, strong reliance placed by the learned Counsel on behalf of the Appellants upon the decision in M. Chandru v. Member Secretary, Chennai Metropolitan Development Authority and Anr. (2009) 4 SCC 72, wherein this Court has held that Infrastructure Development Charge was held to be in the nature of 'fee' and as such subject to principle of 'quid pro quo'. The impugned Regulations do not fall in the realm of 'fee'. Therefore, the said decision has no application in support of the legal submission made by the Appellants' learned senior Counsel. The other decisions in the cases of Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawala and Ors. (1992) 3 SCC 285 and Consumer Online Foundation v. Union of India and Ors. (2011) 5 SCC 360 upon which reliance was pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 603, wherein this Court has categorically held that Regulations can be framed by the Commission under the Act of 2003 as long as two conditions are satisfied, namely, that the Regulations which are framed must be consistent with the provisions of the Act and are made for carrying out the provisions of the Act. Further, the National Electricity Policy, 2005 and Tariff Policy, 2006 being the policies framed by the Union of India cannot supersede or override the principal Act of 2003. To support their contention, the Appellants have placed reliance upon the judgments of this Court in the cases of ITW Signode India Ltd. v. Collector of Central Excise (2004) 3 SCC 48 and Secretary, Ministry of Chemicals and Fertilizers, Government of India v. Cipla Ltd. and Ors. (2003) 7 SCC 1. 28. Further, Mr. Ganesh, the learned senior Counsel on behalf of some of the Appellants has placed reliance on the decision of this Court in the case of J.K. Industries Ltd. and Anr. v. Union of India and Ors. (2007) 13 SCC 673 and contended that the impugned Regulation is a subordinate legislation which may be struck down as arbitrary, contrary to the Statute and Constitution of India on the ground that the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n energy to sub-serve the mandate of Article 21 read with Article 48A of the Directive Principles of the State Policy and Article 51A(g) of the Fundamental Duties enlisted under Chapter IVA of the Constitution of India. Further, the said Regulations are consistent with the International obligations of India, as India has ratified to the Kyoto Protocol on 26.08.2002. Further, the impugned Regulations which impose reasonable restrictions upon the captive generating plant owners are permissible Under Article 19(6) of the Constitution of India. The Respondents have rightly placed reliance upon the judgment of this Court in the case of Society For Unaided Pvt. Schools of Rajasthan (supra), wherein it was held thus: 25. In this connection, the first and foremost principle we have to keep in mind is that what is enjoined by the directive principles (in this case Articles 41, 45 and 46) must be upheld as a "reasonable restriction" Under Articles 19(2) to 19(6). As far back as 1952, in State of Bihar v. Maharaja dhiraja Sir Kameshwar Singh of Darbhanga (1952) SCR 889, this Court has illustrated how a directive principle may guide the Court in determining crucial questions on which the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned Regulations are ultra vires to the provisions of the Act of 2003 in view of the statutory rights conferred upon them under the provisions of the Act of 2003 and in view of the Fundamental Rights guaranteed to them under Part III of the Constitution of India. 31. Further, the learned senior Counsel on behalf of the Appellants have placed reliance on another decision in the case of Tatoba Bhau Savagave and Anr. v. Vasantrao Dhindiraj Deshpande and Ors. (2001) 8 SCC 501, wherein this Court held in support of the proposition of law that the Directive Principles of State Policy cannot be extended in reading into the Act of 2003 for which the legislature has not either specifically or by necessary implication provided. In these appeals, Section 86(1)(e) of the Act of 2003 specifically provides for specifying a percentage of total consumption in the area of Distribution Licensee from renewable sources of energy. In this regard, it is necessary to deal with these contentions urged on behalf of the Appellants' counsel. The contention urged on behalf of the Appellants is that only distribution licensee is obligated towards RPO under the Act. The said contention is wholly unten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held as under: 25. Much ado...... It is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage, if they have appropriate application in circumstances conceivably within the contemplation of the statute. 34. The above contention is rightly repelled by the learned Counsel for the Respondents that such an interpretation would render the words "percentage of total consumption of energy in the area of supply" redundant and nugatory is wholly untenable in law. In case, the legislature intended such power of the Regulatory Commission to be confined to the Distribution Licensee, the said words and phrases of Section 86(1)(e) would have read "total electricity purchased and supplied by distribution licensee". The mere fact that no licence is required for Establishment, Operation and Maintenance of a Captive Power Plant does not imply that the industries engaged in various commercial activities putting up such Captive Power Plants cannot be subjected to Regulatory Jurisdiction of the Commission and required to purchase certain quantum of energy from. Renewable Sources. The RE obligation has been imposed upon the consumption of electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumers of distribution licensee, Captive Power Plants and on supply through distribution licensee. 36. It has been rightly contended by Mr. Krishnan Venugopal, the learned senior Counsel on behalf of the intervener-Wind Independent Power Producers Association, by placing reliance on Section 43(2) of the Act of 2003, which provides for open access and a bare perusal of the said provision would show that open access consumers are also located/situated within the area of distribution licensees and are also connected to the distribution network of such licensees and therefore, the electricity consumed by such open access consumers shall also be necessarily included in the term "Total Consumption in the area of distribution licensee". Similarly, captive power consumers are also located/situated within area of distribution licensee and are connected to the Distribution Network of Distribution licensees either for wheeling electricity or for backup power, if needed. Therefore, the team for "Total Consumption in the area of distribution licensee" would also include such captive power consumers also and accordingly, Section 86(1)(e) grants the State Commission power to specify a minimum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate against the purpose for which they were permitted to set up the captive generating companies and to utilise the maximum power generated for their own use. In support of the said contention reliance is placed upon the decision of this Court in the case of Tatoba Bhau Savagave (supra), wherein it is held as under: 10. In regard to the second contention of Mr. Lalit, there can be no gainsaying the fact that while interpreting a beneficial legislation like the Act under consideration, the directive principles of State policy contained in Article 38 and Clauses (b) and (c) of Article 39 of the Constitution should be uppermost in the mind of a Judge. But that principle cannot be extended to reading in the provisions of the Act that which the legislature has not provided either expressly or by necessary implication. (See: Steel Authority of India Ltd. v. National Union Waterfront Workers.... 39. The learned Counsel on behalf of the Respondents have countered the above contentions by submitting that a distribution licensee is obliged to supply power to Captive Power Plants and Open Access Consumer Under Section 43 of the Act of 2003, if there is a request to supply. In such view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (diesel-1173 MW) representing 59.1%, 10.8% and 1.1.% of the total installed capacity respectively. The Coal dominates the Thermal Power Generation which results in Green House Gases resulting in global warming. The said facts were brought to our notice that the same would certainly justify the case of the RERC in framing the impugned Regulation to achieve the object of the Act and the Constitution by imposing RE obligation on the captive gencos. 42. The learned senior Counsel for the Appellants vehemently made their submissions that payment of penalty in the event of non-compliance of the impugned Regulations is impermissible in law in the absence of specific provisions under the Statute to this effect and the same is in violation of the constitutional provision Under Article 265 of the Constitution of India which specifically provides that "No tax shall be levied or collected except by authority of law". The aforesaid submission is rightly countered by the learned Counsel for the RERC inviting our attention that imposing such surcharge upon the generating companies if they commit default of the impugned Regulations has been purportedly in exercise of its power Under Section 86(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, obligated entity has to deposit the Renewable Purchase Obligation (RPO) charge, as determined by the RERC and such amount will put in a separate fund, created and maintained for the said purpose by obligated entity. This fund shall be utilized partly for (a) purchase of certificates through State agency and (b) for development of transmission and sub-transmission infrastructure for evacuation from generating stations based on renewable energy sources. The deposit of the RPO charge is compensatory in nature. Sections 142 and 147 of the Act of 2003 provide the statutory back-up for penal consequences in contravention of the impugned Regulations framed Under Section 181 r/w Section 86(1)(e) of the Act of 2003. The penalty imposed by impugned Regulations is not in nature of 'tax' but to achieve the object and intendment of the Act of 2003. The penalty imposed by the impugned Regulations upon the Captive Generating Companies who do not comply with the requirements as provided Under Regulation 9 of the impugned Regulations of 2010 are not in nature of 'tax' but it is a 'surcharge' levied Under Section 39(2) of the Act but an alternative mode of enforcement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as captive gencos entities such as the Appellants herein. The impugned Regulations have been enacted in order to effectuate the object of promotion of generation of electricity from renewable sources of energy as against the polluting sources of energy which principle is enshrined in the Act, the National Electricity Policy of 2005 and the Tariff Policy of 2006. The provisions requiring purchase of minimum percentage of energy from renewable sources of energy have been framed with an object of fulfilling the constitutional mandate with a view to protect environment and prevent pollution in the area by utilizing renewable energy sources as much as possible in larger public interest. The High Court has considered the submissions of the Appellants and has rightly rejected the same on the ground that the RE obligation imposed on the captive gencos under the impugned Regulations is neither ultra vires nor violative of the provisions of the Act of 2003 and cannot in any manner be regarded as a restriction on the fundamental rights guaranteed to the Appellants under the Constitution. 45. The learned senior Counsel on behalf of the Appellants placing strong reliance upon paras 5.2.24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity source, including Open Access or captive generation. Thus, for the said consumers, instead of buying physical renewable energy for fulfilling the minimum energy percentage targets as per the impugned Regulation, the renewable energy can be purchased through buying of the said certificates. In this manner there is no need to lower captive electricity generation by a captive consumer for fulfilling the minimum percentage target as provided in the impugned Regulation. Further, Para 6.4 of the Tariff Policy framed Under Section 3 of the Act of 2003, was amended vide Resolution dated 31.3.2008 of the Ministry of Power and published in the Gazette of India, Extraordinary on 22.1.2011. In view of the above, it is a matter of fact that the impugned Regulation does not have the effect of curtailing the power generation of the Captive Power Plant as the Appellants have the right to supply surplus power to the grid. 47. The said paras from the Electricity Policy referred to supra are framed for giving effect to the objects and provisions of the Act and the same cannot be interpreted as restricting the ambit of specific provision contained in Section 86(1)(e) of the Act in any manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous clauses of Section 181(2) of the Act of 2003 is without prejudice to the general and wider power contained in Section 181(1) of the Act of 2003. The 2007/2010 Regulations have been framed by the RERC to effectuate the provisions of Section 86(1)(e) read with Section 86(4) of the Act of 2003 and are covered by Section 181(1) of the Act. In support of the same, reliance was placed on the decision of this Court on the case of PTC India Limited (supra) that the Regulations can be made under the Act as long as two conditions are satisfied, namely, that they are consistent with the Act of 2003 and are made for carrying out for provisions of the Act. 49. The purchase of nominal quantum of energy from renewable resources cannot adversely affect the cost effectiveness of the Captive Power Plant. Moreover, the object being reduction of pollution by promoting renewable source of energy, larger public interest must prevail over the interest of the industry herein which will in any case pass on the extra burden, if any, will be as part of the cost of its products and therefore, the same does not burden the Appellants. The reliance placed upon the aforesaid paras of the policies is mis-conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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