Arcelormittal Nippon Steel India Ltd. vs Dakshin Gujarat Vij Company Ltd. & Ors on 8 July 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The appellant Arcelor Mittal Nippon Steel India Limited [formerly known as ESSAR Steel India Limited), in short “ESIL] has, in this

appeal, assailed the order dated 06.11.2018 passed by the 5th respondent Central Electricity Regulatory Commission (hereinafter referred to as “the Commission”) on the limited aspect that while holding that the Commission cannot deal with the prayers of the 1st respondent, Dakshin Gujarat Vij Company Ltd. (petitioner before the Commission), made in the petition in view of pendency of the insolvency proceedings with regards to the ESIL before the National Company Law Tribunal (NCLT) and the Resolution Professional, has proceeded to pass certain adverse observations against the appellant in Paragraph nos.19, 22 and 30 of the impugned order. It is pointed out that these observations are causing severe prejudice to the appellant as the same are being used against it by the 1st respondent in collateral proceedings including the proceedings pending disposal before the Gujarat Electricity Regulatory Commission.

2. Brief facts, in which the instant appeal has come to be filed by the appellant, are narrated hereinbelow.

3. In the year 2012, ESSAR Steel Private Ltd. (the predecessor of the appellant) approached the Central Commission by way of petition no.245/MP/2012 seeking complete disconnection from the grid of the State of Gujarat and seeking the status of a regional entity by being connected with the Central Grid. The petition was allowed by the

Commission vide order dated 08.06.2013 albeit with certain conditions. One such contention being the payment of Cross Subsidy Surcharge as applicable under the provisions of the Electricity Act, 2003. The relevant portion of the said order is extracted hereinbelow: - “M/s. ESSAR steel Ltd shall remain liable to pay all applicable cross subsidy charges including surcharge and other charges, if any, applicable under the provisions of the 2003 Act and as per the provisions of the regulations of State Regulatory Commission. …”

4. Subsequently, ESSAR Steel India Limited approached the Gujarat Electricity Regulatory Commission by way of petition no.1420/2014 on the issue as whether or not the provisions of the Electricity Act, 2003 as well as the regulations framed by the Gujarat Commission require it to pay Cross Subsidy Surcharge.

5. It appears that another petition was also filed by ESSAR Steel India Limited in this regard before the Gujarat Commission, being petition no.160/2016.

6. Vide order dated 13.06.2014 passed by Gujarat Commission in petition no.1420/2014, it held that the dispute regarding payment of Cross Subsidy Surcharge by the appellant falls within its jurisdiction. The relevant portion of the said order is reproduced hereinbelow: -

“3.1 According to above decision of the CERC, levy of cross subsidy surcharge is subject to the provisions/regulations of the State Commission. As such, any dispute regarding levy of the cross subsidy surcharge is within the Commission’s jurisdiction. Hence, it is binding to the parties. Hence, the present petition falls in the Commission jurisdiction and we admit the same.”

7. Meanwhile, the 1st respondent had approached the Central Commission by way of petition no.112/2014 alleging default by the appellant in payment of Cross Subsidy Surcharge since June, 2013 and praying for the direction to the appellant to immediately pay outstanding amount. The appellant objected the maintainability of the petition on the ground that the dispute relating to payment of Cross Subsidy Surcharge was pending before the Gujarat Commission in petition no.1420/2014 and Gujarat Commission was the competent authority to decide the issue of payment of Cross Subsidy Surcharge. However, the 1st respondent later on sought withdrawal of the petition and accordingly, the petition was disposed of as withdrawn vide order dated 22.07.2015.

8. Thereafter, the appellant also filed petition bearing no.216/2016 before the Central Commission seeking, inter alia, a declaration to the effect that no Cross Subsidy Surcharge was payable by it. The petition

was dismissed by the Central Commission vide order dated 06.07.2016 holding that it did not have jurisdiction to decide the issue relating to Cross Subsidy Surcharge which was within the domain of the Gujarat Commission, the relevant portion of the said order is extracted hereinbelow: - “36. In our view, the dispute raised falls within the jurisdiction of the Gujarat Commission before whom a petition already filed by the petitioner is pending.”

9. ESSAR Steel India Limited was thereafter on 02.08.2017 admitted into corporate insolvency under the Insolvency and Bankruptcy Code, 2016 (in short IBC) and a moratorium was declared under Section 14 of the IBC by the NCLT on the said date.

10. Meanwhile, the 1st respondent approached Western Regional Load Despatch Centre (in short WRLDC) for denial of open access to the ESSAR Steel India Limited but the same was declined by WRLDC in the absence of any express directions in this regard from the Gujarat Commission. In view of such denial on the part of WRLDC, the 1st respondent approached Central Commission again by way of petition no.151/2016 under section 79(1)(c) read with sections 142 and 143 of the Electricity Act, 2003 with the following prayers: -

“(a) Recall the permission granted in the order dated 8.6.2013 passed by the Commission in Petition No. 245/ MP/2012 granting connectivity to the inter-State transmission network of Powergrid Corporation of India for the premises of the Essar Steel and also the regional entity status to Essar Steel on account of violation on the part of Essar Steel on the conditions of due payment of cross subsidy to DGVCL; (b) Direct Powergrid and WRLDC not to entertain any application for grant of open access or otherwise allow any scheduling or despatch to Essar Steel till the outstanding amount towards cross subsidy surcharge are duly paid to DGVCL;

(c) Direct WRLDC to get consent of DGVCL before issuing NOC for open access to Essar Steel and in the event of non-payment, the Petitioner would have the right to withdraw the open access permission granted to Essar Steel; (d) Initiate proceedings against Essar Steel and its directors and officials under Section 142 of the Electricity Act, 2003 for the failure on the part of Essar Steel to comply with the order dated 8.6.2013 passed by the Commission; (e) Direct the filing of the complaint in the appropriate court as per Section 146 of the Electricity Act, 2003 for

deliberate and willful default and with the intent not to obey the order dated 8.6.2013; and (f) Award cost of the present proceedings.”

11. This petition has been disposed of by the Commission vide impugned order dated 06.11.2018. Taking note of the entire conspectus of facts and circumstances of the case, the Central Commission has held in the impugned order as under: - “31. The Petitioner has filed the present petition for termination of the Regional Entity status of ESIL Steel and initiation of the proceedings against ESIL for non- compliance of the Commission`s direction dated 8.6.2013, and directions to PGCIL and WRLDC not to grant open access unless the cross subsidy surcharges are paid. In other words, the Petitioner is seeking execution of the cross subsidy surcharges against ESIL through initiation of appropriate proceedings including withdrawal of regional entity status which would prevent the Essar Steel to take power to its steel facility through ISTS and consequently, affect its source of revenue. Further, the Petitioner has sought initiation of proceedings under Section 142 of the Act which not only provides for penalty for noncompliance of the order of the Commission but also imposition of recurring penalty till the order is complied with and also proceedings under section 146 of the Act. The prayers are in the nature of enforcement of the orders of the Commission and

therefore, are analogous to Section 36 of the Arbitration and Conciliation Act. The prayers are affected by the moratorium under Section 14(1)(a) of the Insolvency and Bankruptcy Code. Therefore, the Commission cannot deal with the prayers of the Petitioner in the present petition during the pendency of the insolvency proceedings before NCLT and Resolution Professional.”

12. As already noted hereinabove, the appellant is aggrieved only by certain observations of the Commission contained in Paragraphs 19, 22 and 30 of the said impugned order, in which certain adverse observations are stated to have been made by the Commission with regards to liability of the appellant to pay Cross Subsidy Surcharge, we find it apposite to extract these three paragraphs of the impugned order hereunder: - “19. From the above discussion, it is crystal clear that as per the order dated 8.6.2013 in Petition No.245/MP/2012, Respondent No.1 is liable to pay the applicable cross subsidy surcharge and other charges to DGVCL as per the provisions of the Act and Regulations of the GERC.” …………………………………………………………………. ………………………………………………………………….

“22. Thus the factual and legal position is abundantly clear that the Respondent No.1/ESIL is obliged to pay

cross subsidy surcharge to DGVCL consequent to its direct connectivity to ISTS and grant of regional status. As discussed above, Respondent No.1/ESIL was paying the cross subsidy surcharge for its non-captive consumption and the cross subsidy surcharge was disputed before GERC in Petition No.1420 of 2014. Respondent No.1/ESIL filed Petition No. 1601 of 2016 before GERC contending that the cross subsidy surcharge is not payable even for non-captive open access. In our view, this is a fresh cause of action and unless GERC grants a stay or decided in favour of Respondent No.1/ESIL, liability for cross subsidy surcharge continues to be on the Respondent No.1. As per the documents on record, no stay has been granted by GERC in Petition No.1601/2016. However, GERC in order dated 30.8.2016 in IA Nos. 7 of 2014 and 3 of 2016 in Petition No. 1420 of 2014 had decided as under: ―

6.11. Further, the issue of CSS payable by ESIL on the units purchased from sources other than EPMPL is also disputed by ESIL stating that it is not liable to pay CSS under the provisions of Section 38 (2) (d) (ii) of the Electricity Act, 2003 and it has filed a petition in this regarding which is pending for registration and hearing before the Commission. Therefore, it is premature to pass any order in this regard. We clarify that there is no stay granted by the Commission on the recovery of the amount of CSS claimed by DGVCL and

GUVNL from ESIL. They are at liberty to take necessary action for recovery of the said amount as per the provisions of the Electricity Act, 2003.

6.12. We clarify that DGVCL and GUVNL are not barred from taking necessary action against ESIL for non-payment of the outstanding CSS amount by approaching the appropriate forum including WRLDC who have given permission for open access as a regional entity.” …………………………………………………………………. ………………………………………………………………….

“30. The Commission has already decided in orders dated 8.6.2013 and 6.7.2016 in Petition Nos. 245/MP/2012 and 216/MP/2016 respectively that ESIL is liable to pay the cross subsidy surcharge to DGVCL consequent to its disconnection from the area of operation of DGVCL and connection to ISTS and grant of status of Regional Entity. Petition Nos.1402 of 2014 and 1601 of 2016 are pending before the GERC. While in Petition No.1402 of 2014, the liability for cross subsidy surcharge in respect of supply from captive source has been challenged, in Petition No.1601/2016, the liability for cross subsidy surcharge from non-captive source has been challenged. Both petitions are pending before GERC, there are no stay. The Respondent No.1 has the liability to pay the cross subsidy surcharge in terms of the Commission’s orders dated 8.6.2013 and 6.7.2016 in Petition Nos. 245/MP/2012 and 216/MP/2016

respectively. Thus, there is no fresh determination of liability of Respondent No.1 towards cross subsidy surcharge in the present petition.” (Emphasis supplied)

13. It was argued by Shri Gopal Jain, learned senior counsel appearing on behalf of the appellant that since the Commission had itself in its order dated 06.07.2016 in petition no.216/2016 held that disputes pertaining to the Cross Subsidy Surcharge were within the domain of Gujarat Commission before whom a petition in that regard was pending disposal at that time, the Commission ought not to have held in the impugned order that Cross Subsidy Surcharge was payable by the appellant. It is submitted that the said observation of the Commission in the impugned order is also contrary to the previous order dated 08.06.2013 passed in petition no.245/2012 wherein the Commission has held that the Cross Subsidy Surcharge would be payable by the appellant if it was payable in terms of the regulations framed by the State Commission i.e. Gujarat Electricity Regulatory Commission.

14. The learned senior counsel further argued that these observations of the Commission in the impugned order having been made while admittedly lacking jurisdiction to decide the issue of payment of Cross Subsidy Surcharge, are causing severe prejudice to the appellant in the

collateral proceedings including those pending disposal before the Gujarat Commission. The learned senior counsel would further submit that in any event, the continuation of the petition before the Commission subsequent to passing of order dated 02.08.2017 by the NCLT whereby the ESIL was admitted to corporate insolvency under Section 14 of the IBC, was in contravention of Section 14(1)(a) of the IBC which provides that upon declaration of moratorium with regards to a corporate entity, there is prohibition on the continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority. It is submitted that this prohibition is absolute and applies to every court and tribunal including the Central Commission. It is pointed out that the Commission has acknowledged in Paragraph nos.31-32 of the impugned order that it cannot pass direction or grant any relief in view of Section 14 of IBC, and therefore, ought not to have proceeded further. Instead, it recorded substantive findings against the appellant in Paragraph nos.19, 22 and 30 of the impugned order which are patently erroneous and cannot be sustained.

15. Shri M G Ramachandran, learned senior counsel appearing on behalf of the 1st respondent has refuted these submissions advanced on behalf of the appellant. He would submit that in the impugned order the

Commission has only recapitulated the decision earlier made in the orders passed by it prior to the admission of CIRP proceedings under the IBC and has not decided afresh any substantial issue on the liability of the appellant to pay Cross Subsidy Surcharge as per its earlier order dated 08.06.2013.

Our analysis:

16. At the very outset, we are constrained to observe that we do not find any merit in the contentions/submission advanced on behalf of the appellant. We have already extracted the Paragraph nos.19, 22 and 30 of the impugned order regarding which the grievance has been raised by the appellant in this appeal. A bare perusal of these three Paragraphs of the impugned order clearly reveals that the Commission has merely reiterated what it had observed and held in the previous orders dated 08.06.2013 and 06.07.2016 passed in petition nos.245/2012 and 216/2016 respectively. In the order dated 08.06.2013, the Commission had specifically held that ESSAR Steel India Limited shall remain liable to pay all applicable cross subsidy charges including surcharge and other charges, if any, applicable under the provisions of 2003 Act and as per the provisions of regulations of State Regulatory Commission. In the order dated 06.07.2016, the Commission has held that the dispute raised with regards to liability of appellant to pay Cross Subsidy

Surcharge falls within the jurisdiction of the Gujarat Commission before whom a petition in this regard has already been filed by the 1st respondent.

17. It is limpid that no fresh liability has been created by the Commission upon the appellant in the impugned order particularly by way of the observations contained in Paragraph nos.19, 22 and 30. The fact remains that in terms of the order dated 08.06.2013, the appellant is liable to pay Cross Subsidy Surcharge as well as other charges which have to be computed by the Gujarat Commission in terms of the provisions of the Electricity Act, 2003 as well as the extant regulations framed in this regard by the Gujarat Commission. Needless to add here that a petition in this regard has already been filed by the 1st respondent before the Gujarat Commission which appears to be still pending disposal.

18. For the same reasons, we are of the view that the impugned order of the Commission does not run contrary to the order dated 02.08.2017 passed under Section 14 of the IBC vide which ESSAR Steel India Limited was admitted into corporate insolvency. We may further note in this regard that the Commission, in the impugned order has recorded that the 1st respondent has already filed its claims before the Resolution Professional and accordingly observed that the 1st respondent is at

liberty to approach the NCLT for appropriate directions with regards to its claim including the Cross Subsidy Surcharge against the appellant. The Commission has further observed that if any grievance with regards to Cross Subsidy Surcharge survives after the conclusion of CIRP, the 1st respondent may approach the appropriate Commission in accordance with law. Therefore, the Central Commission has not taken on to itself the job of computation of the Cross Subsidy Surcharge payable by the appellant and has left the same to be decided by the Gujarat Commission as and when the issue is raised before the said Commission.

Conclusion: -

19. In view of the above discussions, we find the appeal devoid of any merit. The same is hereby dismissed as such.

Pronounced in the open court on this the 08th day of July, 2026.

Virender Bhat Judicial Member

(Seema Gupta) Officiating Chairperson

✓ REPORTABLE / NON-REPORATBLE

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