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ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION4th & 5th Floors, Singareni Bhavan, Red Hills, Hyderabad-500 004

I.A.No.25 of 2010in

R.P.No. 84 of 2003in

O.P.No. 1075 of 2000

Dated: 13.10.2010

Present

Sri A. Raghotham Rao, ChairmanSri R.Radha Kishen, Member

Sri C.R.Sekhar Reddy, Member

Between

Bollineni Castings & Steel Ltd.,Hyderabad represented by itsManaging Director, Mr.B.Sandeep

…. PetitionerAnd

1. The State of Andhra Pradesh represented by Its Principal Secretary, Energy Department, Secretariat, D-Block, II Floor, Hyderabad.

2. The Chairman & Managing Director, Transmission Corporation of A.P. Ltd., 6th Floor, Vidyut Soudha, Somajiguda, Hyderabad

3. The Chairman & Managing Director, Southern Power Distribution Co. of A.P.Ltd., Renigunta Road, Tirupathi.

4. The Chairman & Managing Director, Northern Power Distribution Co. of A.P.Ltd., Warangal.

5. The Chairman & Managing Director, Central Power Distribution Co. of A.P.Ltd., Mint Compound, Hyderabad.

6. The Chairman & Managing Director, Eastern Power Distribution Co. of A.P.Ltd., Visakhapatnam

... Respondents

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This petition coming up for hearing on 29.09.2010 in the presence of Sri.

C.Hanumantha Rao, Advocate for the petitioner and Sri.P.Shiva Rao, Advocate

for the respondents and Sri M.Venugopala Rao, Special Correspondent, Praja

Shakti representing the public, the Commission passed the following:

ORDER

This is a petition filed by the petitioner u/s 94(2) of Electricity Act, 2003 to

direct the CMD of APTransco/Discoms, to pass an interim order to pay the

petitioner for the power generated and exported including the bill amount for the

month of June 2010 and also for taking steps to arrange the payment of regular

bills for the power generated and exported to APTRANSCO till the disposal of the

review petition remanded by the Hon’ble Supreme Court.

2. The case of the petitioner as set out in the affidavit is briefly as follows:

(a) The petitioner established a Biomass Power Plant in Suryapalem

village of Nellore District, basing upon the Govt. of India (GOI)

guidelines and Ministry of New and Renewable Energy and State of

Andhra Pradesh by investing crores of rupees by borrowing loans from

Power Finance Corporation and the amounts of the petitioner.

(b) It was also agreed by APTransco/Discoms to purchase the power at

the rate fixed by the GOI in its policy at the rate of Rs.2.25 per unit with

5% escalation per annum with effect from 1994-95 as base year for a

period of 10 years from the date of COD and also for a further period of

10 more years with a new purchase price that shall be equal to

purchase price at the end of 10th year or the HT tariff prevalent in the

State at that time, whichever is higher and the written Power Purchase

Agreement (PPA) was entered accordingly on 28.03.2000 though the

company had started generating power from 07.10.2003. So the

period of contract is 20 years from 07.10.2003. The purchase of power

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by APTRANSCO/Discoms either from biomass, mini-hydel, bagasse

cogeneration under the written PPAs as per said rates, but the power

produced in the source of solar which is recently accepted for

purchase at Rs.17.91 per unit and it is also as per GOI guidelines and

GoAP policy.

(c) The Commission passed an order in OP No. 10/2010 dated

06.07.2010 and in IA No. 17 / 2010 dated 14.07.2010 duly giving

effect to the policy decisions of GOI and GoAP.

(d) The tariff was fixed by the Commission in OP No. 1075/2000 dated

20.06.2001 and the same was reviewed suomotu, by the Commission

against which writ petitions were filed and the Hon’ble High Court

granted 50% of differential amount between the old and revised tariff

for the actual power supplied by the NCE Developers and the same

was continued by the appellate court and the appeal was allowed.

Against that batch of appeals were filed by APTRANSCO/DISCOMs

and the interim order passed by the Hon’ble High Court is continued till

the disposal of the appeal by the Hon’ble Supreme Court dated

08.07.2010. The Hon’ble Supreme Court while disposing the appeal

set aside the judgement of Hon’ble ATE and remanded matter to the

Commission with a direction to hear NCE Developers afresh to dispose

of the matter afresh and fix determining the tariff for purchase of

electricity in accordance with law, expeditiously. When the petitioner

filed IA No. 7/2010 the Hon’ble Supreme Court disposed the said

petition on 17.09.2010 giving liberty to the petitioner to present

application before the Commission for grant of interim direction for

payment of the withhold amount as per the finding given in paragraph

52(f). It was also held that the order dated 20.06.2001 passed by

A.P.Electricity Regulatory Commission has attained finality as it was

not challenged in any proceeding. The petitioner is entitled to receive

the withhold amount and continue to receive the amounts till the

disposal of the main OP as directed by the Hon’ble Supreme Court.

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Therefore, the Commission may be pleased to direct the respondents

to pay the petitioner to the power generated and exported including the

bill amount of June 2010 and also to order steps to arrange the

payment of regular monthly bills for the power generated and exported

to APTransco and pass such other order or orders as it may deem fit

and proper in the circumstances of the case and to meet the ends of

justice.

3. The contention of the respondents as set out in the counter affidavit is

briefly as follows:

(a) The petitioner entered into PPA with Respondent No.2 in pursuance of the

order dated 20.06.2001. The said order also provided review of price payable

from 01.04.2004 onwards. The PPA at Article 2.2 also provided similar

stipulation. The petitioners are not entitled at the rate as claimed from the

Commercial Operation Date (COD) and also for a period of 10 years from the

COD and also for a further period of 10 years with a new purchase price,

whichever is higher. In the judgment the Hon’ble Supreme Court has considered

and directed the Commission to consider the objections raised by the

respondents except the plea of estoppel and legitimate expectancy against the

State and / or APTRANSCO. The order dated 20.06.2001 provided the following

stipulations:

(i) the NCE developers shall supply power to APTRANSCO/DISCOMS.

(ii) the price payable by APTRANSCO shall be at Rs.2.25/unit with 5%

escalation per annum with 1994-95 as base year.

(iii) a suo-motu review of incentives to take effect from 01.04.2004 will be

undertaken by the Commission after discussion with all concerned parties.

(b) During the pendancy before the Hon’ble High Court, Hon’ble ATE and

Hon’ble Supreme Court, the respondents have paid additional amounts over and

above price fixed by the Commission in its order dated 20.03.2004 under the

interim order.

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(c) Any interim order pending disposal of the judicial proceedings mergers in

the final order. The interim arrangement by which the respondents have paid

50% of differential amount to NCE developers has to be regulated. As such, the

respondents are bound by law to recover the additional amounts paid to NCE

developers in terms of the interim orders passed by the courts, in exercise of

their right of restitution u/s 144 of CPC. Therefore, by exercising lien, after the

monthly bills are passed in favour of petitioners are adjusted towards dues, as

per S.171 of Contract Act. However, the recovery of additional amount paid is

subject to final orders passed by the present proceedings. The respondents

have offered installment recovery of amounts which was not agreed by the

petitioner. The petitioner filed a petition before the Hon’ble High Court and

obtained interim stay order. Simultaneous proceedings before the Commission

and Hon’ble High Court are not permitted under law for the same remedies. It is

prayed that the Commission may be pleased to pass orders dismissing the IA.

4. Now, the point for consideration is, “whether the petitioner is entitled for

interim direction to the effect that recovery of 50% differential amounts paid as

per earlier interim orders should not be made from the payments of monthly bills

from June 2010 and for power supplied to APTRANSCO/DISCOMS by the

petitioner, pending disposal of the tariff fixation case remanded to the

Commission by the Hon’ble Supreme Court?”

5. The learned counsel Sri C.Hanumantha Rao argued on behalf of all the

petitioners except the representative of Agri Gold projecting mainly that the

respondents have taken a unilateral decision by serving a notice dated

26.08.2010 for deducting the amounts payable to the power supplied by them

after disposal of the matter by the Hon’ble Supreme Court on the ground that

they have paid excess amounts for a period of 75 months is against law. The

notice is served to deduct under S.144 of CPC and it is against to the principles

of natural justice, as there is no direction from the judgment of the Hon’ble

Supreme Court dated 08.07.2010 to recover the amounts paid. Merely, because

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the matter is remanded, it does not give any right to the respondent to take

unilateral decision contrary to the provisions of law usurping into the powers of

the Commission. The respondents also calculated 9% interest and started

deduction of the amounts though no provision is incorporated anywhere either

under law or under Contract. The 50% amount has been paid as per the orders

of the Court, but the respondents unilaterally started deduction, though no

permission is given by the Hon’ble Supreme Court, no permission is given by the

Commission, no provision is there under law. The conduct of the respondents

has forced 3 units to be closed by virtue of the deductions effected (the petitioner

unit is closed). Though the Hon’ble Supreme Court has considered that the

Commission would take practical decision which would help in ensuring

existence of these units rather than their extinguishment, and if no direction is

given for payment of the amounts, the petitioner and all the other unit developers

are going to sustain not only hardship but also irreparable loss and ultimately

their units would be closed once for all and therefore, it is necessary in the

interest of justice to grant an interim direction as prayed for.

6. It is also further argued by him that the relief claimed in the writ petition

filed by the respondents and the petition filed before the Commission are under

different provisions of law and with different reliefs and they cannot be held

simultaneous proceedings.

7. The learned counsel for the respondents argued that the NCE Developers

have obtained relief in the writ petition No. 12921/2004 paying 50% of the

differential amount between the old and revised tariff for the actual power

supplied by the developer and the same is now going to be deducted from the

amounts payable to them under S.144 of the CPC and he has also relied upon a

ruling reported in 2009 (3) ALD page 695. It is also further argued that the

developers are not entitled for the amounts, when no direction is given by the

Hon’ble Supreme Court continuing the payments of amounts of 50% of the

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differential amount and the respondents are entitled to recover the amounts by

withholding bill amounts.

8. It is also vehemently argued by him that they have granted installment

payments, but ultimately the developers refused to give their consent for

deduction on installments, forcing the respondents to take unilateral decision for

withholding the payment of the amounts to be paid by them for the power

supplied and it is a debt and they are entitled to deduct the same under S.171 of

the Indian Contract Act.

9. Mr.Venugopal Rao, Special correspondent, Praja Shakti on behalf of the

public submitted that deduction made by the respondents from out of the

amounts payable by them is correct as the order dated 20.03.2004 is in force and

excess amounts paid by the respondents are liable to be recovered in the

interest of the public at large, as it is the public money that is going to be taken

by the developers and the petitioner is not entitled for any interim relief and the

petition is liable to be dismissed.

10. The matter has been examined in the light of the contentions of the two

parties and the submissions made at the time of public hearing.

11. The Commission had passed an order dated 20.06.2001 regarding the

NCE developers and the same was reviewed by the Commission suomotu on

20.03.2004. Against that order, the petitioners filed a writ petition and obtained

an interim order for payment of 50% of differential amount between old and

revised tariff and later filed an appeal before the Hon’ble ATE and Hon’ble ATE

continued the same interim order and ultimately set aside the orders of the

Commission. Against this order of the ATE, APTransco, Discoms and the

APERC preferred batch appeals to the Hon’ble Supreme Court and the Hon’ble

Supreme Court passed an interim order that “no coercive steps shall be taken

until further orders” and ultimately disposed the appeal upholding the exclusive

jurisdiction of the Commission to decide the issues involved and remanded the

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matter to the Commission with a direction that it shall hear NCE Generators

afresh and fix / determine the tariff for purchase of electricity in accordance with

law, expeditiously.

12. It is clear from the orders dated 17.09.2010 of the Hon’ble Supreme Court

in IA No. 7 and 8 of 2010 that liberty has been given to the present

respondents/applicants to move the APERC for grant of interim direction

including stay or otherwise in relation to recovery of arrears in all other matters in

that behalf. In this order, the Hon’ble Supreme Court has directed that the

Commission shall consider such request and decide the matter expeditiously.

13. In their order dt.08-07-2010, the Hon’ble Supreme Court has not given any

direction to deduct / recover from the monthly bills of the period subsequent to

disposal of the said case by the Hon’ble Supreme Court any amounts paid in

pursuance of earlier interim orders. If the respondents felt any need to recover

such amounts, they ought to have approached the Commission with an

appropriate petition.

14. Even though the respondents have suggested in the letter dated

24.07.2010 regarding installments, the same is not translated into action as there

is no concluded contract in between them. In fact, the generators have

requested for payment under this letter dated 24.07.2010 and emphatically

denied about their request for installment deductions in their letter dated

07.08.2001.

15. The contention of the learned counsel for the respondents, that the

Commission can order any number of installments for recovery of the amounts, is

not tenable, as it will amount to prejudging the issue even without completing the

enquiry in the main petition.

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16. The respondents have stated that they have withheld the payment under

section 144 of the Civil Procedure Code. Section 144 deals with restitution. The

instant case does not come under the purview of section 144 CPC. Even the

decision relied upon by the learned counsel for the respondent is not applicable

to the facts of the present case since the decision therein dealt with immovable

property. In that case, a petition was filed under S.144 for restoration of the

property in execution of the decree passed in his favour. Neither the cited

decision nor sec.144 CPC are relevant in the circumstances of the instant case.

17. It has also been contented that it is public money that is going to be

wasted and it is for the Commission to safeguard the same, since it involves a

public policy. It is true that if public money is wasted, it is for the Commission to

prevent the same. In this context it has to be noted that question of recovery

itself arises only after the tariff for the period from 01-04-2004 onwards is

determined by the Commission as part of the remanded case proceedings, since

“excess payment” can only be quantified with reference to the “tariff rates”

applicable for the said period, which will become known only at the conclusion of

remanded case proceedings in the main petition.

18. The contention raised by the respondents that the recoveries are justified

since they are paying the amounts by borrowing money at higher interest and

paying to the developers, is not tenable. The internal financial factors of the

respondents cannot be a consideration for determining the legality of any

recovery.

19. It is also urged by the counsel for the respondents, that the fact that the

Hon’ble Supreme Court has not continued the interim order till the disposal of the

matter by the Commission means that the interim payments need not be

continued and that recovery of the interim amounts already paid can be made.

This contention is not correct since the matter has already been remanded to the

Commission by the Hon’ble Supreme Court and no inference can be drawn

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regarding the recovery of interim amounts during the pendency of the remanded

proceedings merely from the absence of any mention regarding interim payments

in the final order of the Hon’ble Supreme Court.

20. The Hon’ble High Court of Andhra Pradesh in its order dt. 23-08-2010 in

W.P.No.26509 of 2010 in W.P.No.20842 of 2010 has held as follows:

“The action of the Transmission Corporation of Andhra Pradesh Limited

(APTRANSCO) in seeking to recover the differential amount paid to the non-

conventional energy developers is prima facie not in terms of the order dated 08-

07-2010 of the Supreme Court in Civil Appeal Nos.2926 of 2006 and batch. The

Supreme Court, being apprised of the interim arrangements which had continued

during the pendency of the proceedings and also the Special Leave Petitions,

with regard to the payment of 50% of the differential amount, did not pass any

order with regard to the recovery of this amount, pending the exercise by the

Andhra Pradesh Electricity Regulatory Commission (APERC), pursuant to the

remand by the Supreme Court vide the aforesaid order”.

21. The Hon’ble High Court further held in this order as follows:

“………… , In the absence of an express sanction by the Supreme Court

permitting the APTRANSCO to recover the amount paid pursuant to the interim

arrangements, which continued during the pendency of the proceedings, the

impugned recovery by the APTRANSCO pending the exercise by the APERC

appears to be unsustainable on the fact of it. There shall accordingly be stay of

recovery of further amounts from the petitioner on this ground, pending further

orders. The respondents shall not effect recovery on this ground from the

monthly bills submitted by the non-conventional energy developers including the

bill submitted for the energy supplied during the period 25-06-2010 to 24-07-

2010.”

22. The Hon’ble High Court of A.P. in its order dt. 08-09-2010, In

W.P.M.P.No.28577 of 2010 in W.P.No.22414 of 2010 also has given a similar

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finding and direction. The ratio of the above directions is clearly that the

recoveries made by the respondents are not sustainable.

23. The other contention raised by the respondent about simultaneous

proceedings in different courts inviting conflicting decisions is not correct, since

the proceedings are under different provisions of law with different pleas.

Further, this contention is not sustainable by virtue of the finding by the Apex

court vesting adjudicatory powers in the Commission and also Apex Court’s

direction giving liberty to the respondents to approach the Commission for interim

orders.

24. Hence, we are of the considered opinion that the respondents are not

entitled to make recovery of payments, made in pursuance of earlier interim

orders for the period from 01-04-2004 onwards till disposal of the appeal before

the Hon’ble Supreme Court, from the monthly bills for power supplied for the

period subsequent to disposal of the appeal by the Hon’ble Supreme Court.

25. In the result, the petition is allowed, directing the respondents not to make

recovery of payments, made in pursuance of earlier interim orders for the period

from 01-04-2004 onwards till disposal of the appeal before the Hon’ble Supreme

Court, from the monthly bills for power supplied by the NCE generators pending

disposal of the main review petition by this Commission. The amounts, if any,

already withheld / recovered, shall be repaid within 10 days from the date of

receipt of this order. No order as to costs.

This order is corrected and signed on this 13th day of October 2010.

Sd/- Sd/- Sd/-(C.R.Sekhar Reddy) (R.Radha Kishen) (A.Raghotham Rao) Member Member Chairman

//Certified Copy//