NUVOCO VISTAS CORPORATION LIMITED & Anr vs CHHATTISGARH STATE ELECTRICITY REGULATORY COMMISSION & Anr on 19 August 2026

JUDGEMENT

PER HON’BLE MRS. SEEMA GUPTA, OFFICIATING CHAIRPERSON

1. The present appeal has been filed by Nuvoco Vistas Corporation Limited (“Appellant”) challenging the Order dated 29.03.2016 (“Impugned Order”) passed by the Chhattisgarh State Electricity Regulatory Commission (hereinafter referred as “State Commission/CSERC”), in Petition No. 56 of 2012(M). Description of Parties: -

2. The Appellant, Nuvoco Vistas Corporation Limited (earlier know as Lafarge India Limited) Sonadih Cement Plant is a Limited Company incorporated under Companies Act 1956 engaged in production of cement.

3. The Respondent No.1/CSERC is the State Regulatory Commission for the State of Chhattisgarh, discharging statutory functions in terms of Electricity Act 2003. Respondent No. 2, the Chhattisgarh State Power Distribution Company Limited ("CSPDCL") is the State Distribution Company. Factual matrix of the Case:

4. The Appellant, a manufacturer of cement, is a captive user of power generated by its own joint venture company, Arasmeta Captive Power Company Private Limited ("ACCPL"), which operates a 43 MW coal-based captive power plant at village Arasmeta, District Janjgir-Champa, running in parallel with the distribution system of Respondent for making use of the power of the plant for its cement plants at Sonadih, District- Raipur and the cement plant at village Arasmeta, District Champa- Jangir. Permission for parallel operation of the captive plant, and separately for wheeling of 16 MW of power from ACCPL to the Appellant's Sonadih cement plant through open access, was granted by CSPDCL vide its letters dated 11.11.2005.

5. Vide order dated 06.02.2006 in Petition No. 17 of 2005(M), the State Commission made certain special dispensations to promote captive generation, including a relaxation for captive consumers. On review of the same, by order dated 29.09.2006 in Petition No. 16 of 2006(M), the State Commission liberalised this dispensation further, granting captive consumers a liberty to reduce their contract demand to any extent even to zero at any time during the entire period of the two years of the HT agreement and to avail standby power from the licensee, subject to exemption from tariff minimum charges.

6. Acting on this dispensation, the Appellant, by its letter dated 10.10.2006, applied to Respondent No 2-CSPDCL for reduction of its contract demand to zero with effect from 16.10.2006. CSPDCL, by letter dated 04.11.2006, declined to give effect to the reduction from the date sought, invoking Clause 7.11 of the Chhattisgarh State Electricity Supply Code, 2005 ("the Supply Code"), and informed the Appellant that the request was under process.

7. Vide its letter dated 15.12.2006, CSPDCL permitted reduction of contract demand to zero, with effect from 01.01.2007. For the period 4.11.2006 to 31.12.2006, the Respondent presumed that the Appellant was allowed to wheel 16MW of power from its captive plant at Arasmeta but was also to be having a contract demand of 9500 KVA with the licensee.

8. The Respondent-CSPDCL issued energy bills of the months October 2006 (16.10.2006 to 15.11.2006), November 2006 (16.11.2006 to 15.12.2006) and January 2007 (for the period 16.12.2006 to 15.01.2007).

9. Aggrieved by the billing for the period (4.11.2006 to 31.12.2006) in question, the Appellant addressed a series of letters to CSPDCL between November 2006 and February 2007, and thereafter periodically until 2012, principally raising discrepancies concerning wheeled units, electricity duty and cess. The dispute concerning electricity duty was resolved in December 2011 following correspondence with the Chief Electrical Inspector, Government of Chhattisgarh. However, by letter dated 18.05.2012, CSPDCL's Managing Director informed the Appellant, that the billing had been carried out in accordance with the prevailing rules.

10. The Appellant thereupon filed Petition No. 56 of 2012(M) before the State Commission raising the dispute from 04.10.2006 to 31.12.2006 which was initially dismissed vide order dated 12.03.2013 on the ground of limitation. On appeal (Appeal No. 127 of 2013), a Full Bench of this Tribunal held, by order dated 13.03.2015, held that the Limitation Act, 1963 does not apply to proceedings before State/Central Electricity Regulatory Commissions and remanded the matter. The State Commission challenged this ruling before the Hon'ble Supreme Court (Civil Appeal Nos. 5336-5337 of 2015), which was disposed of on 20.07.2015 with a direction that the State Commission decide the matter on merits. Pursuant thereto, the petition was heard afresh and State Commission dismissed the said petition filed by the Appellant seeking, inter alia, a refund of Rs. 1,40,96,072/- allegedly overcharged by Respondent No. 2 - CSPDCL. Aggrieved by such finding, Appellant has filed present Appeal contending that for the period from 04.11.2006 to 31.12.2006, the Respondent –CSPDCL created an anomalous and legally untenable situation, i.e. while permitting the Appellant to wheel 16 MW Electricity from its generating plant, the CSPDCL simultaneously treated the Appellant as continuing to have a contract demand of 9500 KVA, which resulted in wrongful and excessive billing of Rs. 1,40,96,072 and sought refund of the same along with interest. DISCUSSION AND ANALYSIS

11. Heard Mr. Gaurav Bahl, learned counsel for the Appellant, Ms. Rupinder Kaur Learned Counsel for the Respondent No 1, Mr. Akhil Hasija, Learned Counsel for the Respondent No 2, perused the written submissions filed by the parties, Impugned Order and other documents. The summary of the submissions made by parties and our consideration are deliberated in following paragraphs:

SUBMISSIONS URGED ON BEHALF OF APPELLANT

12. The Learned Counsel for the Appellant submits that the State Commission vide its order dated 06.02.2006 and 29.09.2006 relaxed the restrictions for captive consumers, permitting reduction of Contract Demand to any extent, including zero, at any time during the currency of the agreement. Therefore, the Clause 7.9 of the Supply Code which restricts the reduction of Contract Demand during the initial period of supply, and Clause 7.11 which prescribes the procedure for considering such applications stood altered by the Commission itself, and the Respondent CSPDCL had no discretion to insist upon compliance with provisions rendered inapplicable in this regard.

13. It is submitted that the Appellant, by its letter dated 10.10.2006, availed the option to reduce its Contract Demand to zero with effect from 16.10.2006, and sought standby power of 16 MW (17.78 MVA). By letter dated 04.11.2006, CSPDCL declined to give effect to the reduction from the date sought, but on the very same date permitted actual wheeling of 16 MW of electricity from ACCPL to the Appellant's Sonadih Cement Plant as evidenced by the joint meter readings recorded on 04.11.2006 and the communication dated 29.11.2006 issued by the Chief Engineer (Commercial).

14. Having thus recognised and operationalised the Open Access arrangement, the Respondent-CSPDCL could not simultaneously continue to treat the Appellant as an ordinary HT consumer with a Contract Demand of 9500 KVA. Such a position is self-contradictory and contrary to the very scheme contemplated under the Commission's orders dated 06.02.2006 and 29.09.2006, and the Respondent's communication dated 04.11.2006 refusing to recognise the

reduction was accordingly arbitrary, unreasonable and contrary to the regulatory framework.

15. CSPDCL ultimately approved reduction of Contract Demand to zero only with effect from 01.01.2007, vide its letter dated 15.12.2006, resulting in an untenable billing situation for the intervening period from 04.11.2006 to 31.12.2006.

16. It is further submitted that the order dated 29.09.2006 obliged the Respondent-CSPDCL to formulate and execute, after obtaining the Commission's approval, a separate agreement distinct from the ordinary HT agreement governing captive open access consumers opting for zero Contract Demand while availing standby power. Admittedly, no such agreement was ever executed, nor was even a draft furnished, despite the Appellant's repeated requests. Having failed to comply with a mandatory requirement imposed upon it by the Commission's order, the Respondent-CSPDCL could not subsequently seek to impose liabilities inconsistent with the regulatory framework, and cannot be permitted to take advantage of its own failure to comply with the Commission's directions.

17. The Respondent raised bills for the periods 16.10.2006 to 15.11.2006 (October 2006), 16.11.2006 to 15.12.2006 (November 2006) and 16.12.2006 to 15.01.2007 (January 2007), ignoring the Appellant's reduction of Contract Demand and thereby failing to account for: (a) the quantum of electricity wheeled from the captive power plant; (b) the exemption from electricity duty and cess on the wheeled units; and (c) the inapplicability of demand charges, penal demand charges and minimum tariff charges under the Commission's regulatory framework.

18. Though the issue of electricity duty is now settled however Respondent- CSPDCL, failed to rectify the bills insofar as demand charges, penal demand charges, energy charges and penal energy charges are concerned. Its billing methodology was erroneous in three respects: (a) it continued to assume a Contract Demand of 9500 KVA despite the Appellant's exercised option and the wheeling of 16 MW (17.78 MVA) commencing 04.11.2006; (b) it levied penal demand charges at 1.5 times the normal tariff whenever recorded demand exceeded 9500 KVA, though the Appellant never exceeded its sanctioned Open Access capacity of 17.78 MVA; and (c) having correctly deducted the wheeled energy from total consumption, it wrongly presumed the balance corresponded to the recorded maximum demand and bifurcated it into normal and 1.5-times- penal components, without basis in the Commission's orders or the regulatory framework. This resulted in excessive billing of Rs. 1,40,96,072/-, causing substantial financial prejudice to the Appellant. The State Commission, while passing the Impugned Order, effectively rewrote its own earlier orders by importing conditions and restrictions which do not exist therein. SUBMISSIONS URGED ON BEHALF OF RESPONDENTS

19. It is submitted that though the order dated 06.02.2006 and 29.09.2006 granted a special dispensation to captive consumer, permitting them to reduce their contact demand with the licensee to any extent, even to zero, at any time during the period of agreement, however, the expression “Any time" means liberty to apply and it does not imply automatic reduction. It does not override the provisions contained in the Supply Code and therefore to be read in the context in which it is used. The expression "any time" only relaxed the consumer to seek reduction even during the initial agreement and did not dispense with verification

or eliminate metering and commercial compliances and also did not authorise retrospective alteration of billing. The Respondents submit that the clauses 7.9 and 7.11 of the Chhattisgarh State Electricity Supply Code, 2005 (“Supply Code 2005”) is statutory and binds both licensee and consumer. The State Commission orders and the Supply Code 2005 must be read harmoniously and not as displacing one another.

20. It is submitted that time framework as contained in the clause 7.11 provides 60 days to decide after the application is made by the consumer. There is fundamental difference between a right to make an application and right to obtain automatic approval from date chosen by the consumer. The consumer, as provided, is not the authority to determine its own Contract Demand and billing liability. The consumer first has a right to apply and after that licensee must examine and verify and then decide the request. Therefore, the application dated 10.10.2006 made by the Appellant was not self-operative. Further, it is submitted that on 04.11.2006 i.e., 25th day from the Application, the decision to not allow was communicated to the Appellant. This letter was received by the Appellant without any objection or protest. They submit that once CSPDCL communicated its decision in December 2006, Clause 7.11(c) made the reduction effective from the first day of the following month, i.e., 01.01.2007 as a matter of law, and no refund can follow from a premise contrary to the Supply Code.

21. The Appellant’s request for load reduction involved captive wheeling, open- access accounting and standby power, requiring ABT/SEM-compliant metering at both injection and drawal points for accurate energy accounting, scheduling, deviation treatment and billing. It is submitted that the permission for parallel operation and wheeling were conditional and contemplated ABT/ SEM metering, communication/ data transfer and billing modalities. The prerequisite requirement

of SEM installation as per the Regulation 18 of the CSERC (Intra-Open Access in Chhattisgarh) Regulations, 2005. as mentioned in the regulatory orders. The very order dated 06.02.2006 vide which the Appellant invokes for the liberty to reduce the contract demand, expressly directed that “existing arrangement for billing will continue till SEMs are installed.”

22. It is evident from Appellant’s letter dated 20.01.2007 that ABT meter at Sonadih was installed only in December 2006, and Appellant duty was not limited to the arranging the meters but includes the installation, testing, Commissioning and integration of SEMs. Until metering and verification were complete, CSPDCL was justified in continuing to bill under the subsisting arrangement.

23. It is contended by Respondent-CSPDCL that Wheeling and contract demand are legally distinct. Wheeling concerns the flow and accounting of energy from the captive source whereas the contract demand concerns the licensee's obligation to keep capacity available to the consumer. CSPDCL could account for wheeled units while billing on the subsisting 9500 KVA contract demand until 01.01.2007, particularly as the Appellant continued to seek 16 MW of standby power throughout. Standby supply required system planning, commercial terms and metering discipline and the same cannot be presumed to exist without the prescribed process. It is submitted that the Contract demand did not become zero before 01.01.2007, resultantly the refund claim of Rs. 1,40,96,072/-, being founded solely on the rejected premise of reduction from 16.10.2006, collapses.

24. The Open access framework and Section 42(2) of the Electricity Act do not override the Supply Code. Open Access governs use of the distribution system, surcharge/cross subsidy and wheeling rights but does not rewrite the effective date of reduction of contract demand. Further non-finalisation of a

separate agreement cannot be turned into a ground for immediate financial benefit. If any separate agreement or billing modality was required, that only reinforces the position that the arrangement was not self-operative on 16.10.2006. The Appellant cannot rely on the conditional permissions for benefit and simultaneously reject the conditions precedent to their operation.

25. It is further submitted that the series of letters sent to Respondent -CSPDCL dated 25.11.2006, 30.11.2006, 23.12.2006, 30.12.2006, 10.01.2007, 20.01.2007, 24.01.2007, 31.01.2007, 17.10.2011 and 03.11.2011 were marked with objection on discrepancy in billing, wheeling charges, duty and cess, payment refund but nowhere was the issue of load reduction from 9500 KVA to zero was agitated by the Appellant. Rather this objection for the very first-time was raised only in Petition 56 of 2012.

26. The bills for the period October to December 2006 were raised by CSPDCL on the basis of the contract demand of 9500 KVA then subsisting under the license and the Tariff Order dated 13.09.2006, including additional charges for demand recorded in excess of the contract demand in terms of paragraph 5.7.10 of the said Tariff Order. Accordingly, there is no infirmity in the Impugned Order OUR CONSIDERATION:-

27. It is an admitted position that the Appellant, by its application dated 10.10.2006, sought reduction of the contracted demand from 9500 KVA to zero with effect from 16.10.2006. The Respondent–CSPDCL, vide communication dated 04.11.2006, declined to accede to the request with immediate effect, citing the requirement of installation of ABT meters and the stipulations contained in Clause 7.11 of the Supply Code, 2005. The Respondent-CSPDCL, however,

indicated that the application was under consideration and that a decision would be conveyed in due course. Subsequently, by letter dated 15.12.2006, CSPDCL permitted reduction of the contracted demand to zero with effect from 01.01.2007, subject to compliance with the conditions imposed by the State Commission in its order dated 29.09.2006, including execution of a fresh agreement. It is not in dispute that the contract demand was reduced to Zero w.e.f 01.01.2007.

28. Appellant is aggrieved by levy of contract demand charges of 9500 KVA and other related charges for a period from 04.11.2006 till 31.12.2006, especially when Appellant has exercised option and the wheeling of 16 MW (17.78 MVA) commencing 04.11.2006. It is the contention of Appellant that concession of reduction of contract demand to Zero at any time would mean that the time period stipulated in clause 7.11 of Supply Code has stood altered by the Commission itself. While the Respondent contends that the relaxation was confined to the substantive restriction under Clause 7.9, and that the procedural discipline of Clause 7.11 continued to govern.

29. The main issue therefore, pertains to whether the relaxation in reducing the contract demand by captive user granted vide State Commission Order dated 06.02.2006 and 29.09.2006 would mean relaxation in the procedure and timeline prescribed under clause 7.11 of Supply Code 2005. In this context it is apposite to extract the relevant paragraph of the State Commission order dated 06.02.2006: “ 6.7 The Commission feels that its decision not to allow set off on CD may not pose as serious a problem as has been made out by the petitioner for the following reasons. The relevance of CD is only in relation to the maximum demand (MD) charges and/or to a minimum guaranteed consumption where there is a nexus in the tariff between CD and minimum consumption. Of the three kinds of consumers mentioned in para 6.1 above, who are concerned with CD, the last two will have the benefit of the liberal regime for reduction of CD in

the Supply Code. The Supply Code (clause 7.9) permits reduction in CD to the extent of 50% by a consumer only once within the period of agreement which is two years. Further liberalizing this provision, the Commission directs that the captive and non-captive consumers of a CPP may reduce their CD to the extent desired, on availing power supply from the. CPP, any time during the period of the agreement and to any extent. However, such reduction shall be permitted only once in a year. In case, CD is reduced to zero level to avail only standby power from the Board/licensee, the charges will be tariff for temporary connection to that consumer for the period during which power is availed from the licensee, following the provisions of para 8.5.6 of the NTP. So far as the CPP itself is concerned, it can avail of start-up power as per para 8 of this order”.

30. The State Commission in its review order dated 29.09.2006 (review of the order dated 06.02.2006), indicated the charges/tariff applicable for such captive users, who reduces their contract demand to Zero, but are required to draw power from the licensee under emergency, confirming its earlier order that Captive user can reduce their contract demand to zero.

31. The State Commission in the Impugned Order held that it is the clause 7.9 which stand relaxed in terms of State Commission’s modified order and considering the time line specified in clause 7.11 of Supply code 2005, licensee has not made any wrong in reducing the contract demand from 01 January 2007. Relevant portion of the Impugned Order is extracted hereunder: “26. So far it concerns with clause 7.9, it is clear that the clause is relaxed in case of captive user, by the modified order.

27. The clause 7.11 provides 60 daystime for taking decision, in case reduction of contract demand sought. In the modified order it is provided that a captive user can reduce it's contract demand even up to zero at any time including the two years initial period, but in that order no time limit fixed for the licensee for deciding the application. The expression "any time" used in modified order does not mean immediate after making request.

28. It is desired that the application must be decided as early as possible, but not beyond the period specified in the supply code. The narration used "any time" shall mean accordingly. It is further to be considered that after reduction of contract demand the licensee has to manage the balance load

elsewhere, for which, it has needed some time. The time limit prescribed in the supply. code seems reasonable. Hence, we arrive at a conclusion that the licensee has not made any wrong by reducing the contract demand from 01 January, 2007”.

32. Since, the issue pertains to relaxation of Clause 7.9 and applicability of Clause 7.11 of Supply code 2005, it is of relevance to extract the relevant clauses of Supply Code 2005 as under: Clause 7.9 “Generally no application for reduction of contract demand / connected load shall be entertained by the licensee within the initial period of agreement, which is two years from the date of commencement of contract. However, if the consumer is able to satisfy the licensee of the compelling reasons for reduction in contract demand/connected load, reduction to the extent of 50 percent of the contract demand/connected load shall be permitted once during the period of agreement." Clause 7.11 " On Receipt of the application for reduction of load, the licensee shall take the following steps”

a) the licensee shall consider the grounds stated in the application. verify the same and decide the application within a period of 60 days by a reasoned speaking order. If the consumer is not satisfied with the decision of the licensee, an appeal can be made to the Electricity Grievance Redressal Forum set up by the licensee under Section 42 (5) of the Act and then to the Electricity Ombudsman as appointed or designated by the Commission under section 42 (6) of the Act whose decision shall be final subject to such remedy as may be available under any statute.

(b) If the application is not decided by the licensee within the above- mentioned period of 60 days, the applicant may, by a written notice, draw attention to the matter and if no decision is still communicated to him within the period of further 30 days, the permission of reduction of contract shall be deemed to have been granted. the reduction of contract demand shall take effect from the first day of the month following the month in which the decision is communicated or permission is deemed to have been granted.

(c) the reduction of contract demand shall take effect from the first day of the month following the month in which the decision is communicated or permission is deemed to have been granted."

33. A plain reading of Clause 7.9 of the Supply Code, 2005 discloses two substantive restrictions: i) that reduction in contract demand within the initial two-year period of agreement is ordinarily impermissible; and ii) however for compelling reason, subject to satisfaction of licensee, reduction in contract demand to the extent of 50 % is permitted that too only once during the period of agreement i.e., once in two years. The clause also contains a separate stipulation for domestic light and fan consumers, which is not germane to the present controversy.

34. The State Commission, by its orders dated 06.02.2006 and 29.09.2006, consciously addressed these restrictions and relaxed them in favour of captive and non-captive consumers of a Captive Power Plant (CPP). The relaxation was twofold: (i) the contract demand could be reduced to any extent, even to zero, at any time during the agreement period; and (ii) such reduction could be exercised once in a year, as against the earlier stipulation of once in two years.

35. The expression “any time” employed in the Commission’s orders dated 06.02.2006 must be construed contextually. Its import is to lift the embargo contained in Clause 7.9 ; namely, the prohibition against reduction within the initial two-year period and the requirement of demonstrating compelling necessity to the satisfaction of the licensee. In effect, captive consumers were conferred liberty to reduce their contract demand at any stage of the agreement period, without being fettered by the two-year bar or the requirement of proving compelling reasons.

36. We further note that the relaxation granted in the order dated 06.02.2006 is in context of Clause 7.9 of supply code 2005 and there is no discussion/ reference to procedure and time line prescribed in clause 7.11 of Supply Code 2005, while granting such relaxation. Therefore, this relaxation pertains only to the substantive restriction under Clause 7.9. It does not, by implication, extend to the procedural framework and timelines prescribed under Clause 7.11. The Commission’s orders are silent on Clause 7.11, and there is no indication that the procedural safeguards such as the sixty-day period for disposal of applications, the requirement of a reasoned speaking order, and the deemed permission mechanism were intended to be dispensed with. To construe “any time” as overriding Clause 7.11 would be to enlarge the scope of relaxation beyond its expressed intent, and to dilute procedural safeguards which serve a vital regulatory purpose, including procedural requirement, system load management, and maintenance of grid stability.

37. Accordingly, in our view, while captive consumers enjoy substantive liberty under Clause 7.9 as relaxed by the Commission, they remain bound by the procedural discipline of Clause 7.11. The Appellant’s contention that the concession of reduction to zero ipso facto altered the timeline under Clause 7.11 is unsustainable.

38. Further, we find merit in the submission of Respondents that the grant and operationalizing of Open access from 04.11.2006 and reduction of contract demand are two distinct activity and even if Open Access is operationalized from 04.11.2006, it would not mean automatic reduction in contract demand from that date as open Access framework do not override the Supply Code. The Open Access and contract demand are legally distinct. Open Access governs use of

the distribution system, payment of surcharge/cross subsidy etc., whereas the contract demand concerns the licensee's obligation to keep capacity available to the consumer. The Discom could account for wheeled units under the open Access, while billing on the subsisting contract demand of a consumer, until the said contract demand is modified as per the supply code. Both the Open Access and reduction of the contract demand are governed by the different framework and the Open access framework do not override the Supply Code. Accordingly, the contention of the Appellant that since open access has been made effective from 04.11.2006, their contract demand should be considered as zero from 04.11.2006 has no merit The issue is, therefore, answered against the Appellant.

39. Accordingly, we hold that the relaxation granted by the State Commission in its orders dated 06.02.2006 and 29.09.2006 was confined to the substantive restriction under Clause 7.9 of the Supply Code, 2005, and did not extend to the procedural framework and timelines prescribed under Clause 7.11 of supply Code 2005. The expression “any time” must be understood as lifting the embargo on reduction of contract demand within the initial two-year period and dispensing with the requirement of demonstrating compelling necessity, but not as overriding the procedural discipline of Clause 7.11. In the present case, the Respondent– CSPDCL has acted within the statutory framework by granting reduction with effect from 01.01.2007, and the levy of demand charges for the intervening period 04.11.2006 to 31.12.2006 cannot be faulted.

40. In view of these observations, we do not feel it necessary to deliberate the other contention of Appellant with regard to the action not being taken by CSPDCL with regard to the signing of fresh agreement in terms of order dated 29.09.2006 as admittedly the contract demand of Appellant was reduced to Zero

w.e.f. 01.01.2007, within the time line stipulated in clause 7.11 of supply code 2005.

ORDER

In view of the above deliberations, we do not discern any infirmity in the Impugned Order passed by the State Commission. The same is accordingly upheld. The Captioned Appeal fails and is dismissed as being devoid of merit. Pending interlocutory applications, if any, stand disposed of in terms of this judgment. PRONOUNCED IN THE OPEN COURT ON THIS 19th DAY OF AUGUST, 2026. (Virender Bhat) Judicial Member (Seema Gupta) Officiating Chairperson REPORTABLE / NON-REPORTABLE _________________________________________________ pr/dk/ak/ag